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As filed with the Securities and Exchange Commission on November 7, 2000
File Nos. 333-41461 and 811-8529
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 14
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
MEMORIAL FUNDS
Two Portland Square
Portland, Maine 04101
207-879-1900
D. Blaine Riggle
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Anthony C.J. Nuland, Esq.
Seward & Kissel, LLC
1200 G Street, NW
Washington, D.C. 20005
--------------------------------------------------------------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
X on November 7, 2000 pursuant to Rule 485, paragraph (b)
60 days after filing pursuant to Rule 485, paragraph (a)(1)
on _________________ pursuant to Rule 485, paragraph (a)(1)
75 days after filing pursuant to Rule 485, paragraph (a)(2)
on _________________ pursuant to Rule 485, paragraph (a)(2)
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of series being registered: Daily Cash Fund. Daily Cash Fund is structured
as a master-feeder fund and this registration statement is also executed by Core
Trust (Delaware).
The prospectus and SAI filed via EDGAR in post-effective amendment number 6 on
August 17, 1999, accession number 0001004402-99-000353 for Money Market Fund,
International Equity Fund and Equity Income Fund are incorporated by reference
into this registration statement.
<PAGE>
LOGO
PROSPECTUS
Institutional Shares
November 7, 2000
Daily Cash Fund
The Fund seeks to provide high current income
consistent with the preservation of capital and the
maintenance of liquidity.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE FUND'S SHARES OR DETERMINED WHETHER
THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Table Of Contents
Summary X
Performance Information X
Fee Tables X
Management XX
Your Account XX
How To Contact The Fund XX
General Information XX
Buying Shares XX
Selling Shares XX
Exchange Privileges XX
Other Information XX
Financial Highlights XX
<PAGE>
SUMMARY
This Prospectus offers Institutional Shares of Daily Cash Fund (the "Fund").
With a minimum investment of $1,000 the institutional shares are designed for
institutional investors.
INVESTMENT OBJECTIVES
The investment objective of the Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
PRINCIPAL INVESTMENT STRATEGIES
[Margin callout: CONCEPTS TO UNDERSTAND
MONEY MARKET SECURITY means a high credit quality, short-term U.S.
dollar denominated debt security
GOVERNMENT SECURITY means a security that is issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
REPURCHASE AGREEMENT means a transaction in which the Fund purchases
securities and simultaneously commits to resell the securities to the
other party at an agreed-upon date and at a price reflecting a market
rate of interest]
The Fund invests in a diversified portfolio of Money Market Securities and:
o seeks to maintain a stable net asset value of $1.00 per share,
o invests in securities with remaining maturities of 397 days or less
o maintains a dollar weighted average maturity of its investments of 90
days or less.
The Fund is a "gateway" fund in a "Core and Gateway(R)" structure. The Fund
invests substantially all of its assets in Cash Portfolio (the "Portfolio"),
another mutual fund which has the same investment objective and substantially
similar investment policies. The Portfolio's invests primarily in a broad
spectrum of Money Market Securities including:
o securities issued by financial institutions, such as certificates of
deposits, bank notes, bankers' acceptances and time deposits of banks
and their foreign branches
o securities issued by domestic companies, such as commercial paper
o Government Securities
o Repurchase Agreements.
Forum Investment Advisors, LLC, the investment adviser for the Portfolio (the
"Adviser"), continuously monitors economic factors such as interest rate
outlooks and technical factors such as prevailing interest rates and Federal
Reserve policy to determine an appropriate maturity profile for the Portfolio's
investments. The Adviser selects securities that satisfy the maturity profile of
the Portfolio and that provide the greatest potential return relative to the
risk of the security.
The Adviser may sell a security if:
o revised economic forecasts or interest rate outlook requires a
repositioning of the Portfolio
o the security subsequently fails to meet the Adviser's investment
criteria
o funds are needed for another purpose
Principal Risks Of Investing In The Fund
[Margin callout: MONEY MARKET FUND DISCLOSURE
An investment in the Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.]
<PAGE>
There is no assurance that the Fund will achieve its investment objective. An
investment in the Fund is not by itself a complete or balanced investment
program. The principal risks of investing in the Fund are described below.
These risks can result in a decrease in the value of a security or all the
securities owned by the Fund and, therefore, a change in the Fund's $1.00 per
share value. These risks also can result in lower investment performance.
INTEREST RATE RISK Interest rates may affect the value of the Portfolio's
investments. Increases in interest rates may cause a decline in value. In
addition, those increases may cause the Fund's investment performance to
underperform currently available investments.
CREDIT RISK The value of a security held by the Portfolio may decline if the
security's credit rating is downgraded or its credit quality otherwise falls. In
the worst case, an issuer of a security or a Repurchase Agreement counter-party
may default or otherwise be unable to make timely payments of interest or
principal. Not all Government Securities are supported by the full faith and
credit of the U.S. Government as are Treasury Securities.
MANAGEMENT RISK As with all mutual funds, the Adviser may make poor investment
decisions.
PERFORMANCE INFORMATION
The Fund has assumed the performance history of the Portfolio in which it
invests. The following charts and tables provide some indication of the
historical risks of investing in the Fund by showing changes in the performance
of the Portfolio from year to year. The performance reflects the period from the
beginning of the Portfolio's operational performance history to the creation of
the Fund. The Portfolio's historical performance has been restated to reflect
the Fund's higher expense level. Performance information presented here
represents only past performance and does not necessarily indicate future
results.
[EDGAR Representation of Bar Chart]
1996 4.72%
1997 4.92%
1998 4.79%
1999 4.43%
During the periods shown in the chart, the highest quarterly return was 1.27%
(for the quarter ended December 31, 1997) and the lowest return was 1.01% (for
the quarter ended June 30, 1999).
The following table lists the Portfolio's average annual total return as of
December 31, 1999.
Year(s) THE PORTFOLIO
1 Year 4.43%
Since Inception (9/1/95) 4.75%
<PAGE>
FEE TABLES
The following table describe the various fees and expenses that you will pay if
you invest in Institutional Shares of the Fund. There are no charges to purchase
or redeem Fund shares.
Management Fees (1) 0.18%
Distribution (Rule 12b-1) Fees 0.15%
Other Expenses 0.56%
Total Annual Fund Operating Expenses (2) 0.89%
(1) Includes all investment advisory and administration fees.
(2) Based on estimated expenses for the Fund's fiscal year ending December 31,
2000. The Fund's expenses include its pro-rata share of the expenses of the
Portfolio.
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in the Institutional Shares to the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% annual return,
that the operating expenses remain the same as stated in the above table, and
that distributions are reinvested. Although your actual costs may be higher or
lower, under these assumptions your costs would be:
1 year 3 years
$90 $282
MANAGEMENT
The Fund is a series of Memorial Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and of the Fund is managed under
the direction of the Board of Trustees (the "Board"). The Board formulates the
general policies of the Fund and meets periodically to review the Fund's
performance, monitor investment activities and practices and discuss other
matters affecting the Fund. Additional information about the Board and the
Trust's executive officers is in the Statement of Additional Information (the
"SAI").
THE ADVISER
The Portfolio's investment adviser is Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101. The Adviser's primary business is fixed
income investment management and, in addition to the Portfolio, advises two
other money market funds and five taxable and tax-free bond funds. The Adviser
makes investment decisions for the Portfolio.
During the Portfolio's last fiscal year, the aggregate advisory fees paid, as a
percentage of average net assets paid to the Adviser were 0.03%.
Memorial Investment Advisors, Inc. ("MIA") has been retained as a "dormant" or
"back up" investment adviser to manage any assets redeemed and invested directly
by the Fund. MIA does not receive any compensation under this arrangement as
long as the Fund invests directly in the Portfolio. If the Fund redeems assets
from the Portfolio and invests them directly, MIA would receive an investment
advisory fee from the Fund for the management of those assets in the same amount
paid by the Portfolio to its adviser.
<PAGE>
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provides various services to
the Fund. As of October 1, 2000, Forum provided administration and distribution
services to investment companies and collective investment funds with assets of
approximately $ 122 billion.
Forum Shareholder Services, LLC is the Fund's transfer agent (the "Transfer
Agent").
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of the Fund's shares. The distributor acts as the representative of
the Trust in connection with the offering of the Fund's shares. The distributor
may enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares and may, at
its own expense, compensate persons who provide services in connection with the
sale or expected sale of the Fund's shares.
SHAREHOLDER SERVICES PLAN
The Trust has adopted a shareholder services plan permitting the Trust to
compensate financial institutions for acting as shareholder servicing agents for
their customers.
DISTRIBUTION EXPENSES
The Trust has a distribution plan adopted under SEC Rule 12b-1 that allows the
Trust to pay asset-based sales charges or distribution fees for the distribution
and sale of the Fund's shares. These fees are charged at an annual rate of 0.15
percent of the average daily net assets of the Fund. Because these fees are paid
out of a Fund's assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
FUND EXPENSES
The Fund pays all of its expenses. The Fund's expenses include its own expenses
as well as Trust expenses that are allocated among the Fund with other funds of
the Trust. The Adviser or other service providers may voluntarily waive all or
any portion of their fees and/or reimburse certain expenses of the Fund. Any fee
waiver or expense reimbursement increases the Fund's performance for the period
during which the waiver or reimbursement is in effect.
<PAGE>
YOUR ACCOUNT
[Margin Callout HOW TO CONTACT THE FUND
WRITE TO US AT:
Daily Cash Fund
P.O. Box 446
Portland, Maine 04112
TELEPHONE US AT:
(888) 263-5593 (Toll Free)
WIRE INVESTMENTS (OR ACH PAYMENTS) TO US AT:
BankBoston
Boston, Massachusetts
ABA #011000390
FOR CREDIT TO:
Forum Shareholder Services, LLC
Account # 541-54171
Daily Cash Fund
(Your Name)
(Your Account Number)]
GENERAL INFORMATION
You may purchase or sell (redeem) shares at the net asset value of a share
("NAV") next calculated after the Transfer Agent receives your request in proper
form. Requests to purchase shares must be accompanied by funds on deposit at a
Federal Reserve Bank ("Federal Funds"). Investments are not accepted or invested
by the Fund during the period before the receipt of Federal Funds.
Shares become entitled to received distributions on the day of purchase if the
order and payment are received by the Transfer Agent as follows (times indicated
are Eastern time):
--------------------------------------- ------------------------------------
Order must be received by Payment must be received by
--------------------------------------- ------------------------------------
2:00 p.m. 4:00 p.m.
--------------------------------------- ------------------------------------
On days that the Bond Market Association recommends an early close of the
government securities markets or that those markets or the Federal Reserve Bank
of San Francisco close early, the Trust/Fund may advance the time by which the
Transfer Agent must receive completed purchase and redemption orders.
If you purchase shares directly from the Fund, you will receive monthly
statements and a confirmation of each transaction. You should verify the
accuracy of all transactions in your account as soon as you receive your
confirmations.
The Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED The Fund calculates its NAV as of 4:00 p.m.,
Eastern time on each weekday except Federal holidays and other days that the
Federal Reserve Bank of San Francisco is closed ("Fund Business Day"). The time
at which NAV is calculated may change in case of an emergency. In order to
maintain a stable NAV of $1.00 per share, the Fund (and the Portfolio in which
it invests) values the securities in its portfolio on an amortized cost basis.
TRANSACTIONS THROUGH THIRD PARTIES If you invest through a broker or other
financial institution, the policies and fees charged by that institution may be
different than those of the Fund. Banks, brokers, retirement plans and financial
advisers may charge transaction fees and may set different minimum investments
or limitations on buying or selling shares. Consult a representative of your
financial institution for more information.
<PAGE>
BUYING SHARES
HOW TO MAKE PAYMENTS All investments must be in U.S. dollars and checks must be
drawn on U.S. banks.
CHECKS For individual, sole proprietorship, joint and Uniform Gifts to
Minors Act ("UGMA") or Uniform Transfer to Minors Act ("UTMA")
accounts, the check must be made payable to "Daily Cash Fund" or to one
or more owners of the account and endorsed to "Daily Cash Fund." For
all other accounts, the check must be made payable on its face to
"Daily Cash Fund." No other method of check payment is acceptable (for
instance, you may not pay by travelers check).
PURCHASES BY AUTOMATED CLEARING HOUSE ("ACH") This service allows you
to purchase additional shares through an electronic transfer of money
from your checking or savings account. When you make an additional
purchase by telephone, the Transfer Agent will automatically debit your
pre-designated bank account for the desired amount. You may call (888)
263-5593 to request an ACH transaction.
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for this
service.
MINIMUM INVESTMENTS The minimum initial investment for the Fund is $1,000. There
is no minimum additional investment. Management of the Fund may choose to waive
the initial investment minimum.
ACCOUNT REQUIREMENTS
<TABLE>
<S> <C>
TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS: o Instructions must be signed by all persons
Individual accounts are owned by one person, as are sole required to sign exactly as their names appear
proprietorship accounts. Joint accounts can have two or on the account
more owners (tenants)
---------------------------------------------------------- -------------------------------------------------------------
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a
These custodial accounts provide a way to give money to a custodial account under the UGMA or UTMA
child and obtain tax benefits. o The custodian must sign instructions in a
manner indicating custodial capacity
---------------------------------------------------------- -------------------------------------------------------------
BUSINESS ENTITIES o Submit a Corporate/Organization Resolution
form or similar document
---------------------------------------------------------- -------------------------------------------------------------
TRUSTS o The trust must be established before an
account can be opened
o Provide a certified trust document, or the
pages from the trust document that identify
the trustees
</TABLE>
<PAGE>
INVESTMENT PROCEDURES
<TABLE>
<S> <C>
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
BY CHECK BY CHECK
o Call or write us for an account application o Fill out an investment slip from a
and/or a Corporate/Organization Resolution form confirmation statement or write us a letter
o Complete the application o Write your account number on your check
o Mail us your application and a check o Mail us the slip (or your letter) and a check
BY WIRE BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
and/or a Corporate/Organization Resolution form o Instruct your bank to wire your money to us
o Complete the application
o Call us to fax the completed application and we
will assign you an account number
o Mail us your original application
o Instruct your bank to wire your money to us
BY ACH PAYMENT BY SYSTEMATIC INVESTMENT
o Call or write us for an account application o Complete the Systematic Investment section of
and/or a Corporate/Organization Resolution form the application
o Complete the application o Attach a voided check to your application
o Call us to fax the completed application and we o Mail us the completed application and the
will assign you an account number voided check
o Mail us your original application
o Make an ACH payment
</TABLE>
SYSTEMATIC INVESTMENTS You may invest a specified amount of money in the Fund
once or twice a month on specified dates. These payments are taken from your
bank account by ACH payment. Systematic investments must be for at least $100.
LIMITATIONS ON PURCHASES The Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is likely to engage in excessive trading (usually
defined as more than four exchanges out of a Fund within a calendar year).
CANCELED OR FAILED PAYMENTS The Fund accepts checks and ACH transfers at full
value subject to collection. If your payment for shares is not received or you
pay with a check or ACH transfer that does not clear, your purchase will be
canceled. You will be responsible for any losses or expenses incurred by the
Fund or the Transfer Agent, and the Fund may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange or redemption due to nonpayment.
SELLING SHARES
The Fund processes redemption orders promptly and you will generally receive
redemption proceeds within a week. Delays may occur in cases of very large
redemptions, excessive trading or during unusual market conditions. If the Fund
has not yet collected payment for the shares you are selling, however, it may
delay sending redemption proceeds for up to 15 calendar days until the Fund has
received payment.
<PAGE>
TO SELL SHARES FROM YOUR ACCOUNT
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The Fund name
o The dollar amount or number of shares you want to sell
o How and where to send your proceeds
o Obtain a signature guarantee (if required)
o Obtain other documentation (if required)
o Mail us your request and documentation
BY WIRE
o Wire requests are only available if you provided bank account information
on your account application and your request is for $5,000 or more
o Call us with your request (unless you declined telephone redemption
privileges on your account application - See "By Telephone") or
o Mail us your request (See "By Mail")
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which the account is registered
o Additional form of identification
o Your proceeds will be:
o Mailed to you or
o Wired to you (unless you declined wire redemption privileges on your
account application - See "By Wire")
SYSTEMATICALLY
o Complete the systematic withdrawal section of the application
o Attach a voided check to your application
o Mail us your completed application
TELEPHONE REDEMPTION PRIVILEGES You may redeem your shares by telephone unless
you declined telephone redemption privileges on your account application. You
may be responsible for any fraudulent telephone order as long as the Transfer
Agent takes reasonable measures to verify the order.
WIRE REDEMPTION PRIVILEGES You may have your redemption proceeds wired to you if
you provided bank account information on your account application. The minimum
amount that may be redeemed by wire is $5,000. If the Transfer Agent receives
your wire redemption order after 2:00 p.m., eastern time (or other time as may
be determined), for the Fund, the Transfer Agent will wire proceeds to you on
the next Fund Business Day.
SYSTEMATIC WITHDRAWAL If you own shares of the Fund with an aggregate value of
at least $10,000 you may request a specified amount of money from your account
once a month or once a quarter on a specified date. These payments can be sent
to your address of record by check or to a designated bank account by ACH
payment. Systematic requests must be for at least $100.
SIGNATURE GUARANTEE REQUIREMENTS To protect you and the Fund against fraud,
signatures on certain requests must have a "signature guarantee." A signature
guarantee verifies the authenticity of your signature. You can obtain one from
most banking institutions or securities brokers, but not from a notary public.
For requests made in writing, a signature guarantee is required for any of the
following:
o Sales of over $50,000 worth of shares.
o Changes to a shareholder's record name
<PAGE>
o Redemption from an account for which the address or account registration
has changed within the last 30 days
o Sending redemption proceeds to any person, address, brokerage firm or bank
account not on record
o Sending redemption proceeds to an account with a different registration
(name or ownership) from yours
o Changes to systematic investment or withdrawal, distribution, telephone
redemption or exchange option or any other election in connection with your
account
SMALL ACCOUNTS If the value of your account falls below $1,000, the Fund may ask
you to increase your balance. If the account value is still below $1,000 after
60 days, the Fund may close your account and send you the proceeds. The Fund
will not close your account if it falls below this amount solely as a result of
a reduction in your account's market value.
REDEMPTIONS In Kind The Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash. These redemptions "in kind" usually occur
if the amount requested is large enough to affect the Fund's operations (for
example, if the redemption represents more than one percent of the Fund's
assets).
LOST ACCOUNTS The Transfer Agent will consider your account "lost" if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address. When an account is "lost", all
distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to the Transfer Agent will be
reinvested and the checks will be canceled.
EXCHANGE PRIVILEGES
You may sell your Fund shares and buy shares of any other series of the Memorial
Funds, also known as an exchange, by telephone or in writing. Because exchanges
are treated as a sale and purchase, they may have tax consequences.
REQUIREMENTS You may exchange only between identically registered accounts
(name(s), address and taxpayer ID number). There is currently no limit on
exchanges, but the Fund reserves the right to limit exchanges. You may exchange
your shares by mail or by telephone, unless you declined telephone redemption
privileges on your account application. You may be responsible for any
fraudulent telephone order as long as the Transfer Agent takes reasonable
measures to verify the order.
How To Exchange
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The names of the funds you are exchanging
o The dollar amount or number of shares you want to sell (and exchange)
o If opening a new account, complete an account application if you are
requesting different shareholder privileges
o Mail us request and documentation
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
<PAGE>
OTHER INFORMATION
ADDITIONAL INVESTMENT POLICIES
The Fund and Portfolio operate in accordance with "Rule 2a-7" under the
Investment Company Act of 1940. All restrictions relating to maturity, credit
and diversification are interpreted in accordance with that rule.
The Portfolio may from time to time take temporary defensive positions in
response to adverse market, economic, political or other conditions. For
instance, the Portfolio may hold cash in any amount. The Portfolio may invest in
other money market mutual funds that have substantially similar policies.
Securities in which the Portfolio invests may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The Portfolio limits these securities to those
with an interest rate that is adjusted based solely on a single short-term rate
or index, such as the Prime Rate.
CORE AND GATEWAY(R)
The Fund invests substantially all of its assets in the Portfolio, which is a
series of Core Trust (Delaware) ("Core Trust"). The Fund may withdraw its entire
investment from the Portfolio at anytime that the Board decides it is in the
Fund's best interest to do so. The board of trustees of Core Trust formulates
the general policies of the Portfolio and meets periodically to review the
Portfolio's performance, monitor investment activities and practices and discuss
other matters affecting the Portfolio. Additional information about the Core
Trust's board and executive officers is in the SAI.
DISTRIBUTIONS
The Fund declares distributions from net investment income daily and pays those
distributions monthly. In addition, the Fund pays capital gain distributions, if
any, at least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested.
TAXES
GENERAL
The Fund intends to operate in a manner such that it will not be liable for
Federal income or excise tax.
The Fund's distributions will consist primarily of dividends. The Fund's
distributions of net income (including short-term capital gain) are taxable to
you as ordinary income. The Fund's distributions of long-term capital gain, if
any, are taxable to you as long-term capital gain regardless of how long you
have held Fund shares. The Fund's distributions also may be subject to certain
state and local taxes.
The Fund will send you information about the income tax status of distributions
paid during the year shortly after December 31 of each year. For further
information about the tax effects of investing in the Fund, please see the SAI
and consult your tax adviser.
FINANCIAL HIGHLIGHTS
Financial highlights are not provided because the Fund had not commenced
operations prior to the date of this Prospectus.
<PAGE>
FOR MORE INFORMATION
<TABLE>
<S> <C>
MEMORIAL
The following documents are available free upon request: FUNDS
ANNUAL/SEMI-ANNUAL REPORTS
The Fund will provide annual and semi-annual reports to shareholders that
will provide additional information about the Fund's investments. In the DAILY CASH FUND
Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's
performance during its preceding fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more
detailed information about the Fund and is incorporated by reference into
(and is legally part of) this Prospectus.
CONTACTING THE FUND
You can get a free copy of the SAI, request other information and discuss
your questions about the Fund by contacting the Fund at:
Memorial Funds
P.O. Box 446
Portland, Maine 04112
888-263-5593 Memorial Funds
P.O. Box 446
SECURITIES AND EXCHANGE COMMISSION INFORMATION Portland, Maine 04112
You can also review the Fund's SAI at the Public Reference Room of 888-263-5593
the Securities and Exchange Commission ("SEC").
You can get copies, for a fee, by writing to:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
E-mail address: [email protected]
The scheduled hours of operation of the Public Reference Room may be
obtained by calling the SEC at 1-202-942-8090. Free copies of the SAI
are also available from the SEC's Internet website at http://www.sec.gov.
Investment Company Act File No. 811-8529
</TABLE>
<PAGE>
MEMORIAL
FUNDS
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 7, 2000
FUND INFORMATION:
Memorial Funds
Two Portland Square DAILY CASH FUND
Portland, Maine 04101
(888) 263-5593
ACCOUNT INFORMATION AND
SHAREHOLDER SERVICES:
Forum Shareholder
Services, LLC
P.O. Box 446
Portland, Maine 04101
(888) 263-5593
This Statement of Additional Information or "SAI" supplements the Prospectus
dated November 7, 2000, as may be amended from time to time, offering
Institutional Shares of Daily Cash Fund (the "Fund"). This SAI is not a
prospectus and should only be read in conjunction with the Prospectus. The
Prospectus may be obtained without charge by contacting shareholder services at
the address or telephone number listed above.
<PAGE>
TABLE OF CONTENTS
Glossary ...........................................................2
1. General Information.................................................3
2. Investment Policies and Risks.......................................3
3. Investment Limitations..............................................10
4. Performance Data and Advertising....................................14
5. Management..........................................................18
6. Portfolio Transactions..............................................25
7. Additional Purchase and Redemption Information......................26
8. Taxation ...........................................................29
9. Other Matters.......................................................32
Appendix A - Description of Securities Ratings...............................A-1
Appendix B - Miscellaneous Tables............................................B-1
Appendix C - Performance Data................................................C-1
Appendix D - Additional Advertising Materials................................D-1
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GLOSSARY
"Adviser" means Forum Investment Advisors, LLC
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"Custodian" means the custodian of the Fund's assets.
"FAdS" means Forum Administrative Services, LLC, administrator of the Fund.
"FAcS" means Forum Accounting Services, LLC, fund accountant of the Fund.
"FFS" means Forum Fund Services, LLC, distributor of the Fund's shares.
"FSS" means Forum Shareholder Services, LLC, transfer agent of the Fund.
"Fund" means Daily Cash Fund
"Fitch" means Fitch IBCA, Inc.
"Government Securities" means securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (see prospectus).
"Moody's" means Moody's Investors Service.
"NAV" means net asset value per share (see prospectus).
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means Cash Portfolio, a series of Core Trust.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation, a division of McGraw Hill Companies.
"Transfer Agent" means Forum Shareholder Services, LLC, the transfer agent and
distribution disbursing agent of the Fund.
"Treasury Securities" means securities issued or guaranteed by the U.S. Treasury
(see prospectus).
"Trust" means Memorial Funds.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
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GENERAL INFORMATION
The Fund is a "gateway" fund in a Core and Gateway(R) structure. The Fund
invests substantially all of its assets in the Cash Portfolio, a portfolio of
Core Trust, another open-end, management investment company, with identical
investment objectives and substantially similar investment policies.
CONSIDERATIONS OF INVESTING IN THE PORTFOLIO
The Fund's investment in the Portfolio may be affected by the actions of other
investors in the Portfolio. The Fund may withdraw its entire investment from the
Portfolio at any time if the Board determines that it is in the best interests
of the Fund and its shareholders to do so. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it would incur transaction costs. If the Fund withdrew
its investment from the Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in accordance with its
investment objective and policies by the Adviser or the investment of all of the
Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund.
INVESTMENT POLICIES AND RISKS
The following discussion supplements the disclosure in the Prospectus about the
Fund's investment techniques, strategies and risks. Unless otherwise indicated
below, the discussion of the investment policies of the Fund also refers to the
investment policies of the Portfolio in which the Fund invests.
SECURITY RATINGS INFORMATION
Under Rule 2a-7, the Portfolio must normally invest at least 95% of its total
assets in securities that are rated in the highest short-term rating category
for debt obligations, or are unrated and determined to be of comparable quality.
Unrated securities may not be as actively traded as rated securities. The
Portfolio may retain securities whose rating has been lowered below the lowest
permissible rating category (or that are unrated and determined by the Adviser
to be of comparable quality) if the Adviser determines that retaining such
security is in the best interest of the Portfolio. Because a downgrade often
results in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.
Moody's, S&P and other NRSROs are private services that provide ratings of the
credit quality of debt obligations, including convertible securities. A
description of the range of ratings assigned to various types of securities by
several NRSROs is included in Appendix A to this SAI. The Portfolio may use
these ratings to determine whether to purchase, sell or hold a security. Ratings
are general and are not absolute standards of quality. Securities with the same
maturity, interest rate and rating may have different market prices. To the
extent that the ratings given by a NRSRO may change as a result of changes in
such organizations or their rating systems, the Adviser will attempt to
substitute comparable ratings. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not evaluate the risks of fluctuations in
market value. Also, rating agencies may fail to make timely changes in credit
ratings. An issuer's current financial condition may be better or worse than a
rating indicates.
GENERAL RISKS
INTEREST RATE RISK Changes in interest rates affect the market value of the
interest-bearing fixed income securities held by the Portfolio. There is
normally an inverse relationship between the market value of securities
sensitive to prevailing interest rates and actual changes in interest rates. The
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longer the remaining maturity (and duration) of a security, the more sensitive
the security is to changes in interest rates. All fixed income securities,
including U.S. Government Securities, can change in value when there is a change
in interest rates.
CREDIT RISK The Portfolio's investment in fixed income securities is subject to
credit risk relating to the financial condition of the issuers of the securities
that the Portfolio holds. Credit risk is the risk that a counterparty to a
transaction will be unable to honor its financial obligation. To limit credit
risk, the Portfolio only invests in securities rated in the highest rating
category of an NRSRO or those that are unrated and deemed to be of comparable
credit quality by the Adviser.
MORTGAGE AND ASSET BACKED SECURITIES The value of mortgage-related securities
may be significantly affected by changes in interest rates, the markets'
perception of issuers, the structure of the securities and the creditworthiness
of the parties involved. The ability of the Portfolio to successfully utilize
mortgage-related securities depends in part upon the ability of the Adviser to
forecast interest rates and other economic factors correctly. Some
mortgage-related securities have structures that make their reaction to interest
rate changes and other factors difficult to predict.
Prepayments of principal of mortgage-related securities by mortgagors or
mortgage foreclosures affect the average life of the mortgage-related
securities. Mortgage prepayments may be triggered by various factors, including
the level of interest rates, general economic conditions, the location and age
of the mortgages and other social and demographic conditions. In periods of
rising interest rates, the prepayment rate tends to decrease, lengthening the
average life of a pool of mortgage-related securities. In periods of falling
interest rates, the prepayment rate tends to increase, shortening the average
life of a pool. The volume of prepayments of principal on the mortgages
underlying a particular mortgage-related security will influence the yield of
that security and the Portfolio's yield. Because prepayments of principal
generally occur when interest rates are declining, the Portfolio may have to
reinvest the proceeds of prepayments at lower interest rates than those of their
previous investments. When this occurs, the Portfolio's yield will decline. A
decrease in the rate of prepayments may extend the effective maturities of
mortgage-related securities, increasing their sensitivity to changes in market
interest rates. To the extent that the Portfolio purchases mortgage-related
securities at a premium, unscheduled prepayments, which are made at par, result
in a loss equal to any unamortized premium.
MONEY MARKET SECURITIES
VARIABLE AND FLOATING RATE SECURITIES
The Portfolio may invest in fixed income securities with variable or floating
rates. The yield of variable and floating rate securities varies in relation to
changes in specific money market rates, such as the Prime Rate. A "variable"
interest rate adjusts at predetermined intervals (for example, daily, weekly or
monthly), while a "floating" interest rate adjusts whenever a specified
benchmark rate (such as the bank prime lending rate) changes. These changes are
reflected in adjustments to the yields of the variable and floating rate
securities, and different securities may have different adjustment rates.
Accordingly, as interest rates increase or decrease, the appreciation or
depreciation may be less on these obligations than for fixed rate obligations.
To the extent that the Portfolio invests in long-term variable or floating rate
securities, the Adviser believes that the Portfolio may be able to take
advantage of the higher yield that is usually paid on long-term securities.
The Portfolio will only purchase variable or floating rate securities, whose
interest rate is adjusted based on a single short-term rate or index such as the
Prime Rate. Under Rule 2a-7 of the 1940 Act, the Portfolio may only purchase
securities with maturities of greater than 397 days if they have demand features
that meet certain requirements or they are certain long-term U.S. Government
Securities.
The Portfolio also may purchase variable and floating rate corporate master
notes and similar securities. Master notes with variable or floating interest
rates are unsecured obligations that are redeemable upon notice. You may invest
fluctuating amounts in these instruments at varying rates of interest under a
direct arrangement with the issuer. These obligations include master demand
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notes. The issuer of these obligations often has the right, after a given
period, to prepay its outstanding principal obligations upon a specified number
of days' notice. These obligations generally are not traded and there is
generally no established secondary market for these obligations. To the extent a
demand note does not have a seven day or shorter demand feature and there is no
readily available market for the obligation, it is treated as an illiquid
security.
MORTGAGE BACKED AND ASSET BACKED SECURITIES
The Portfolio may purchase adjustable rate mortgage backed or other asset backed
securities (such as Small Business Association Securities that are Government
Securities). These securities directly or indirectly represent a participation
in, or are secured by and payable from, adjustable rate mortgages or other loans
that may be secured by real estate or other assets. Most mortgage-related
securities are pass-through securities, which means that investors receive
payments consisting of a pro-rata share of both principal and interest (less
servicing and other fees), as well as unscheduled prepayments, as loans in the
underlying mortgage pool are paid off by the borrowers. Additional prepayments
to holders of these securities are caused by prepayments resulting from the sale
or foreclosure of the underlying property or refinancing of the underlying
loans. Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities.
ADJUSTABLE RATE MORTGAGE BACKED SECURITIES Adjustable rate mortgage securities
("ARMs") are pass-through securities representing interests in pools of mortgage
loans with adjustable interest rates that are reset at periodic intervals,
usually by reference to some interest rate index or market interest rate, and
that may be subject to certain limits. Although the rate adjustment feature may
reduce sharp changes in the value of adjustable rate securities, these
securities can change in value based on changes in market interest rates or
changes in the issuer's creditworthiness. Changes in the interest rates on ARMs
may lag behind changes in prevailing market interest rates. This may result in a
slightly lower net value until the interest rate resets to market rates. Thus,
the Portfolio could suffer some principal loss if the Portfolio sold the
securities before the interest rates on the underlying mortgages were adjusted
to reflect current market rates. Some adjustable rate securities (or the
underlying mortgages) are subject to caps or floors, that limit the maximum
change in interest rates during a specified period or over the life of the
security.
SMALL BUSINESS ADMINISTRATION SECURITIES Small Business Administration
securities ("SBA") are variable rate securities that are backed by the full
faith and credit of the United States Government, and generally have an interest
rate that resets monthly or quarterly based on a spread to the Prime Rate. SBA
securities generally have maturities at issue of up to 40 years. The Portfolio
may not purchase an SBA security if, immediately after the purchase, (1) the
Portfolio would have more than 15% of its net assets invested in SBA securities
or (2) the total unamortized premium (or the total unaccreted discount) on SBA
securities would exceed 0.25% of the Portfolio's net assets.
COLLATERALIZED MORTGAGE OBLIGATIONS The Portfolio may purchase collateralized
mortgage obligations ("CMOs"), which are collateralized by mortgage-backed
securities or by pools of conventional mortgages. CMOs typically have a number
of classes or series with different maturities and are generally retired in
sequence. Each class of bonds receives periodic interest payments according to
the coupon rate on the bonds. However, all monthly principal payments and any
prepayments from the collateral pool are paid first to the "Class 1"
bondholders. The principal payments are such that the Class 1 bonds will be
completely repaid no later than, for example, five years after the offering
date. Thereafter, all payments of principal are allocated to the next most
senior class of bonds until that class of bonds has been fully repaid. Although
full payoff of each class of bonds is contractually required by a certain date,
any or all classes of bonds may be paid off sooner than expected because of an
acceleration in pre-payments of the obligations comprising the collateral pool.
FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES
The Portfolio currently is prohibited from purchasing any security issued by the
Federal Home Loan Mortgage Corporation. This does not prohibit the Portfolio
from entering into repurchase agreements collateralized with securities issued
by the Federal Home Loan Mortgage Corporation.
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REPURCHASE AGREEMENTS AND SECURITIES LENDING
GENERAL
The Portfolio may enter into Repurchase Agreements. Repurchase Agreements are
transactions in which the Portfolio purchases securities from a bank or
securities dealer and simultaneously commits to resell the securities to the
bank or dealer at an agreed-upon date and at a price reflecting a market rate of
interest unrelated to the purchased security. During the term of a Repurchase
Agreement, the Portfolio's custodian, subcustodian or other third party
custodian maintains possession of the purchased securities and any underlying
collateral, which is maintained at not less than 100% of the repurchase price.
Repurchase Agreements allow the Portfolio to earn income on its uninvested cash
for periods as short as overnight, while retaining the flexibility to pursue
longer-term investments.
RISKS
Repurchase Agreements involve credit risk. In the event that bankruptcy,
insolvency or similar proceedings are commenced against a counterparty, the
Portfolio may have difficulties in exercising its rights to the underlying
securities. The Portfolio may incur costs and expensive time delays in disposing
of the underlying securities and it may suffer a loss. Failure by the other
party to deliver a security purchased by or lent by the Portfolio may result in
a missed opportunity to make an alternative investment. Favorable insolvency
laws that allow the Portfolio, among other things, to liquidate the collateral
held in the event of the bankruptcy of the counterparty reduce counterparty
insolvency risk with respect to Repurchase Agreements. The Portfolio will only
enter a Repurchase Agreement with a seller that the Adviser believes present
minimal credit risk.
BORROWING
GENERAL
The Portfolio may borrow money from banks for temporary or emergency purposes in
an amount up to 33 1/3% of the Portfolio's total assets. The Portfolio may
borrow money for other purposes so long as such borrowings do not exceed 5% of
the Portfolio's total assets. The purchase of securities is prohibited if the
Portfolio's borrowing exceeds 5% or more of the Portfolio's total assets.
RISKS
The use of borrowing involves special risks, including magnified capital losses.
If the Portfolio buys securities with borrowed funds and the value of the
securities declines, the Portfolio may be required to provide the lender with
additional funds or liquidate its position in these securities to continue to
secure or repay the loan. The Portfolio may also be obligated to liquidate other
portfolio positions at an inappropriate time in order to pay off the loan or any
interest payments associated with the loan.
To the extent that the interest expense involved in a borrowing transaction
approaches the net return on the Portfolio's investment portfolio, the benefit
of borrowing will be reduced. If the interest expense due to a borrowing
transaction exceeds the net return on the Portfolio's investment portfolio, the
Portfolio's use of borrowing would result in a lower rate of return than if the
Portfolio did not borrow. The size of any loss incurred by the Portfolio due to
borrowing will depend on the amount borrowed. The greater the percentage
borrowed, the greater potential of gain or loss to the Portfolio.
WHEN-ISSUED SECURITIES
GENERAL
The Portfolio may purchase securities offered on a when-issued or
delayed-delivery basis. When these transactions are negotiated, the price, which
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is generally expressed in yield terms, is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the transaction,
but delayed settlements beyond two months may be negotiated. During the period
between a commitment and settlement, no payment is made for the securities
purchased by the purchaser and thus, no interest accrues to the purchaser from
the transaction. At the time the Portfolio makes the commitment to purchase
securities on a when-issued or delayed delivery basis, the Portfolio will record
the transaction as a purchase and thereafter reflect the value each day of such
securities in determining its net asset value.
RISKS
At the time the Portfolio makes a commitment to purchase securities in this
manner, the Portfolio immediately assumes the risk of ownership, including the
risk that the value of the security may decline. The use of when-issued
transactions and forward commitments enables the Portfolio to protect against
anticipated changes in interest rates and prices, but may also increase the
volatility of the Portfolio's asset value per unit. Failure by a counterparty to
deliver a security purchased by the Portfolio on a when-issued or delayed
delivery basis may result in a loss to the Portfolio or a missed opportunity to
make an alternative investment.
ILLIQUID SECURITIES
GENERAL
The Portfolio may invest up to 10% of its net assets in illiquid securities. The
term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and, except as
otherwise determined by the Adviser, securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
RISKS
Limitations on resale may have an adverse effect on the marketability of a
security and the Portfolio might also have to register a restricted security in
order to dispose of it, resulting in expense and delay. The Portfolio might not
be able to dispose of restricted or illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying
redemptions. There can be no assurance that a liquid market will exist for any
security at any particular time. Any security, including securities determined
by the Adviser to be liquid, can become illiquid.
DETERMINATION OF LIQUIDITY
The Adviser determines and monitors the liquidity of the portfolio securities
and reports periodically on its decisions to the Board. The Adviser takes into
account a number of factors in reaching liquidity decisions, including but not
limited to: (1) the frequency of trades and quotations for the security; (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (3) the willingness of dealers to undertake to make a
market in the security; and (4) the nature of the marketplace trades, including
the time needed to dispose of the security, the method of soliciting offers, and
the mechanics of the transfer.
An institutional market has developed for certain restricted securities.
Accordingly, contractual or legal restrictions on the resale of a security may
not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the 1933 Act or other exemptions, the Adviser may determine that the securities
are not illiquid.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated as illiquid
securities if there is no readily available market for the instrument.
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INVESTMENT LIMITATIONS
The investment objective of the Fund and Portfolio are fundamental. The
Portfolio and Fund have also adopted a fundamental policy which provides that,
notwithstanding any other investment policy or restriction (whether
fundamental), the Portfolio or Fund, as applicable, may invest all of its assets
in the securities of a single pooled investment fund having substantially the
same investment objectives, policies and restrictions as the Fund or Portfolio,
as applicable.
A fundamental policy of the Fund cannot be changed without the affirmative vote
of the lesser of: (1) 50 percent of the outstanding shares of the Fund (or
interests in the case of the Portfolio); or (2) 67 percent of the shares of the
Fund (or interests of the Portfolio) present or represented at a shareholders
meeting at which the holders of more than 50 percent of the outstanding shares
of the Fund (or interests in the case of the Portfolio) are present or
represented. The Board may change a nonfundamental policy of the Fund without
shareholder approval and the Core Trust Board may change a nonfundmental policy
of the Portfolio without interestholder consent.
For purposes of all investment policies of the Fund and Portfolio (1) the term
1940 Act includes the rules thereunder, SEC interpretations and any exemptive
order upon which the Fund or Portfolio may rely; and (2) the term Code includes
the rules thereunder, IRS interpretations and any private letter ruling or
similar authority upon which the Fund or Portfolio may rely.
Except as required by the 1940 Act or the Code, if any percentage restriction on
investment or utilization of assets is adhered to at the time an investment is
made, a later change in percentage resulting from a change in the market values
of the Fund's or Portfolio's assets or purchases and redemptions of shares will
not be considered a violation of the limitation.
FUNDAMENTAL LIMITATIONS
The Portfolio may not:
DIVERSIFICATION With respect to 75% of its assets, purchase a security other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer.
CONCENTRATION Purchase securities if, immediately after the purchase, more than
25% of the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the same
industry; provided, however, that there is no limit on investments in U.S.
Government Securities.
For purposes of concentration: (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
UNDERWRITING Underwrite securities of other issuers, except to the extent that
the Portfolio may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.
REAL ESTATE Purchase or sell real estate or any interest therein, except that
the Portfolio may invest in debt obligations secured by real estate or interests
therein or issued by companies that invest in real estate or interests therein.
COMMODITIES Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related contracts
will not be deemed to be physical commodities.
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BORROWING Borrow money, except for temporary or emergency purposes (including
the meeting of redemption requests) and except for entering into reverse
repurchase agreements, provided that borrowings do not exceed 33 1/3% of the
value of the Portfolio's total assets.
SENIOR SECURITIES Issue senior securities except as appropriate to evidence
indebtedness that the Portfolio is permitted to incur, and provided that the
Portfolio may issue shares of additional series or classes that the Trustees may
establish.
LENDING Make loans except for loans of portfolio securities, through the use of
repurchase agreements, and through the purchase of debt securities that are
otherwise permitted investments.
NONFUNDAMENTAL LIMITATIONS
The Portfolio may not:
DIVERSIFICATION With respect to 100% of its assets, purchase a security other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer, unless the
investment is permitted by Rule 2a-7 under the 1940 Act.
BORROWING Purchase securities for investment while any borrowing equaling 5% or
more of the Portfolio's total assets is outstanding; and if at any time the
Portfolio's borrowings exceed the Portfolio's investment limitations due to a
decline in net assets, such borrowings will be promptly (within three days)
reduced to the extent necessary to comply with the limitations. Borrowing for
purposes other than meeting redemption requests will not exceed 5% of the value
of the Portfolio's total assets.
SECURITIES WITH VOTING RIGHTS Purchase securities that have voting rights,
except the Portfolio may invest in securities of other investment companies to
the extent permitted by the 1940 Act.
MARGIN; SHORT SALES Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.
LIQUIDITY Acquire securities or invest in Repurchase Agreements with respect to
any securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements not
entitling the holder to payment of principal within seven days and in securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
PERFORMANCE DATA AND ADVERTISING
PERFORMANCE DATA
The Fund may quote performance in various ways. All performance information
supplied in advertising, sales literature, shareholder reports or other
materials is historical and is not intended to indicate future returns.
The Fund may compare any of its performance information with:
o Data published by independent evaluators such as Morningstar, Inc., Lipper
Inc., IBC Financial Data, Inc., CDA/Wiesenberger or other companies which
track the investment performance of investment companies ("Fund Tracking
Companies").
o The performance of other mutual funds.
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o The performance of recognized stock, bond and other indices, including but
not limited to U.S. Treasury bonds, bills or notes and changes in the
Consumer Price Index as published by the U.S. Department of Commerce.
Performance information may be presented numerically or in a table, graph or
similar illustration.
Indices are not used in the management of the Fund but rather are standards by
which the Adviser and shareholders may compare the performance of the Fund to an
unmanaged composite of securities with similar, but not identical,
characteristics as the Fund.
The Fund may refer to: (1) general market performance over past time periods
such as those published by Ibbotson Associates (for instance, its "Stocks,
Bonds, Bills and Inflation Yearbook"); (2) mutual fund performance rankings and
other data published by Fund Tracking Companies; and (3) material and
comparative mutual fund data and ratings reported in independent periodicals,
such as newspapers and financial magazines.
The Fund's performance will fluctuate in response to market conditions and other
factors.
PERFORMANCE CALCULATIONS
The Fund's performance may be quoted in terms of yield or total return. Appendix
B includes performance information for the Fund.
SEC YIELD
Yield quotations for the Fund will include an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and are calculated by dividing the net change during
the seven-day period in the value of an account having a balance of one share at
the beginning of the period by the value of the account at the beginning of the
period, and multiplying the quotient by 365/7. For this purpose, the net change
in account value reflects the value of additional shares purchased with
dividends declared on the original share and dividends declared on both the
original share and any such additional shares, but would not reflect any
realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any effective
annualized yield quotation used by the Fund is calculated by compounding the
current yield quotation for such period by adding 1 to the product, raising the
sum to a power equal to 365/7, and subtracting 1 from the result. The
standardized tax equivalent yield is the rate an investor would have to earn
from a fully taxable investment in order to equal the Fund's yield after taxes.
Tax equivalent yields are calculated by dividing the Fund's yield by one minus
the stated Federal or combined Federal and state tax rate. If a portion of the
Fund's yield is tax-exempt, only that portion is adjusted in the calculation.
TOTAL RETURN CALCULATIONS
The Fund's total return shows its overall change in value, assuming that all of
the Fund's distributions are reinvested.
AVERAGE ANNUAL TOTAL RETURN Average annual total return is calculated using a
formula prescribed by the SEC. To calculate standard average annual total
returns the Fund: (1) determines the growth or decline in value of a
hypothetical historical investment in the Fund over a stated period; and (2)
calculates the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that performance is not constant over time but changes from year to year, and
that average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
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Average annual total return is calculated according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 payment made at the
beginning of the applicable period
Because average annual returns tend to smooth out variations in the Fund's
returns, shareholders should recognize that they are not the same as actual
year-by-year results.
OTHER MEASURES OF TOTAL RETURN Standardized total return quotes may be
accompanied by non-standardized total return figures calculated by alternative
methods.
The Fund may quote unaveraged or cumulative total returns that reflect
the Fund's performance over a stated period of time.
Total returns may be stated in their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to
total return.
Any total return may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments and/or a series of
redemptions over any time period. Total returns may be quoted with or without
taking into consideration the Fund's front-end sales charge or contingent
deferred sales charge (if applicable).
Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total return above
OTHER MATTERS
The Fund may also include various information in its advertising, sales
literature, shareholder reports or other materials including, but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity; (2) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents; (3)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quarterly or daily); (4) information
relating to inflation and its effects on the dollar; (for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively); (5) biographical descriptions of the Fund's portfolio
managers and the portfolio management staff of the Fund's Adviser, summaries of
the views of the portfolio managers with respect to the financial markets, or
descriptions of the nature of the Adviser's and its staff's management
techniques; (6) the results of a hypothetical investment in the Fund or class
over a given number of years, including the amount that the investment would be
at the end of the period; (7) the effects of investing in a tax-deferred
11
<PAGE>
account, such as an individual retirement account or Section 401(k) pension
plan; (8) the net asset value, net assets or number of shareholders of the Fund
or class as of one or more dates; and (9) a comparison of the Fund's or class's
operations to the operations of other funds or similar investment products, such
as a comparison of the nature and scope of regulation of the products and the
products' weighted average maturity, liquidity, investment policies, and the
manner of calculating and reporting performance.
In connection with its advertisements, the Fund or class may provide
"shareholder letters" that serve to provide shareholders or investors with an
introduction to the Fund's, the Trust's or any of the Trust's service provider's
policies or business practices.
12
<PAGE>
MANAGEMENT
TRUSTEES AND OFFICERS OF THE TRUST
The names of the Trustees and officers of the Trust, their position with the
Trust, address, date of birth and principal occupations during the past five
years are set forth below. Each Trustee who is an "interested person" (as
defined by the 1940 Act) of the Trust is indicated by an asterisk (*). The Board
supervises the Fund's activities, monitors its contractual arrangements with
various service providers and decides upon matters of general policy.
<TABLE>
<S> <C> <C>
------------------------------------------ ----------------------------------- -------------------------------------------------
NAME, ADDRESS AND AGE POSITION(S) WITH FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE
YEARS
------------------------------------------ ----------------------------------- -------------------------------------------------
Christopher W. Hamm* Chairman of the Board of President, Memorial Group, Inc. since 1998
Trustees, Executive Director, CIBC Oppenheimer 1996-98
5847 San Felipe, Suite 4545 President Vice President, Paine Webber 1993-96
Houston, Texas 77002 Valuation Committee, Member(1)
Born: March 1967
------------------------------------------ ----------------------------------- -------------------------------------------------
John Y. Keffer* Trustee President and Director, Forum Financial
Valuation Committee, Member(1) Services, Inc. for more than five years
Two Portland Square Director and sole shareholder (directly and
Portland, Maine 04101 indirectly) Forum Financial Group LLC, which
Born: July 1942 owns (directly or indirectly) Forum
Administrative Services, LLC. Forum Shareholder
Services, LLC and Forum Investment Advisers, LLC
Officer, Director or Trustee, various funds
managed and distributed by FAdS or FFS
------------------------------------------ ----------------------------------- -------------------------------------------------
Jay Brammer Trustee Executive Vice President, Gibralter Properties,
Audit Committee, Member(2) Inc., a real estate holding company, since 1995
9000 Keystone Crossing, Suite Executive Vice President, Gibraltar Mausoleum
1000 Corp., 1980-95
Indianapolis, Indiana 46240
Born: August 1957
------------------------------------------ ----------------------------------- -------------------------------------------------
J.B. Goodwin Trustee President, JBGoodwin Company, a comprehensive
Audit Committee, Member(2) real estate and holding company, for more than
3933 Steck Avenue, B-101 five years
Austin, Texas 78759
Born: December 1949
------------------------------------------ ----------------------------------- -------------------------------------------------
Robert Stillwell Trustee Attorney, Baker & Botts, a law firm, for more
Audit Committee, Chairman(2) than five years
3000 One Shell Plaza
Houston, Texas 77002
Born: January 1937
------------------------------------------ ----------------------------------- -------------------------------------------------
Ronald H. Hirsch Vice President and
Treasurer Managing Director of Operations and Finance,
Two Portland Square Forum Financial Group since 9/99
Portland, Maine 04101 Member of the Board, Citibank Germany from
Born: October 1943 1991-1998
------------------------------------------ ----------------------------------- -------------------------------------------------
Thomas G. Sheehan Vice President Managing Director and Counsel, Forum Financial
Group, LLC since 1993
Two Portland Square Special Counsel, Division of Investment
Portland, Maine 04101 Management SEC
Born: November 1954 Officer, various funds managed and distributed
by FAdS or FFS
------------------------------------------ ----------------------------------- -------------------------------------------------
D. Blaine Riggle Secretary Counsel, Forum Financial Group, LLC, since 1998
Associate Counsel, Wright Express Corporation
Two Portland Square (a Fleet credit card company), 3/97 - 1/98
Portland, Maine 04101 Associate at the law firm of Friedman, Babcock
Born: November 1966 & Gaythwaite, 1994 - 3/97
Officer, various funds managed and distributed
by FAdS or FFS
13
<PAGE>
------------------------------------------ ----------------------------------- -------------------------------------------------
Marcella A. Cote Assistant Secretary Senior Fund Specialist, Forum Financial Group,
LLC, since 1998
Two Portland Square Budget Analyst, State of Maine Department of
Portland, Maine 04101 Human Services, 2/97 - 5/98
Born: January 1947 Project Assistant, Muskie School of Public
Service, 1994 - 2/97
Officer, various funds managed and distributed
by FAdS or FFS
------------------------------------------ ----------------------------------- -------------------------------------------------
Dawn L. Taylor Assistant Treasurer Tax Manager, Forum Financial Group, LLC, since
1997
Two Portland Square Senior Tax Accountant, Purdy, Bingham &
Portland, Maine 04101 Burrell, LLC, 1/97 - 10/97
Born: May, 1964 Senior Fund Accountant, Forum Financial Group,
LLC, 9/94 - 1/97
Officer, various funds managed and distributed by
FAdS or FFS
------------------------------------------ ----------------------------------- -------------------------------------------------
</TABLE>
(1) The Valuation Committee is responsible for determining and monitoring the
value of the Fund's assets.
(2) The Audit Committee is responsible for meeting with the Trust's independent
certified public accountants to: (a) review the arrangements and scope of
any audit; (b) discuss matters of concern relating to the Trust's financial
statements, including any adjustments to such statements recommended by the
accountants, or other results of any audit; (c) consider the accountants'
comments with respect to the Trust's financial policies, procedures, and
internal accounting controls; and (d) review any form of opinion the
accountants propose to render to the Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
Each Trustee receives an annual fee of $5,000, and is paid $500 for each Board
meeting attended and $500 for each committee meeting attended on a date when a
Board meeting is not held.
Trustees are also reimbursed for travel and related expenses incurred in
attending meetings of the Board.
Trustees that are affiliated with the Adviser receive no compensation for their
services or reimbursement for their associated expenses. No officer of the Trust
is compensated by the Trust.
TRUSTEES AND OFFICERS OF CORE TRUST
The names of the Trustees and officers of Core Trust, their positions with Core
Trust, address, date of birth and principal occupations during the past five
years are set forth below. Each Trustee who is an "interested person" (as
defined by the 1940 Act) of Core Trust is indicated by an asterisk (*). The Core
Trust Board supervises the Portfolio's activities, monitors its contractual
arrangements with various service providers and decides upon matters of general
policy.
14
<PAGE>
<TABLE>
<S> <C> <C>
-------------------------------------- --------------------------- ---------------------------------------------------
NAME, DATE OF BIRTH POSITION WITH THE TRUST PRINCIPAL OCCUPATION(S) DURING
AND ADDRESS PAST 5 YEARS
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
John Y. Keffer* Chairman and President Member and Director, Forum Financial Group, LLC
Born: July 15, 1942 (a mutual fund services holding company)
Two Portland Square Director, Forum Fund Services, LLC (Trust's
Portland, Maine 04101 underwriter)
Officer of six other investment companies for
which Forum Financial Group, LLC provides services
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
Costas Azariadis Trustee Professor of Economics, University of
Born: February 15, 1943 California-Los Angeles
Department of Economics Visiting Professor of Economics, Athens
University of California University of Economics and Business 1998-1999
Los Angeles, CA 90024 Trustee of one other investment company for which
Forum Financial Group, LLC provides services
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
James C. Cheng Trustee President, Technology Marketing Associates
Born: July 26, 1942 (marketing company for small and medium size
27 Temple Street businesses in New England)
Belmont, MA 02718 Trustee of one other investment company for which
Forum Financial Group, LLC provides services
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
J. Michael Parish Trustee Partner, Thelen Reid & Priest LLP (law firm)
Born: November 9, 1943 since 1995
40 West 57th Street Partner, Winthrop Stimson Putnam & Roberts (law
New York, NY 10019 firm) 1989-1995
Trustee of one other investment company for which
Forum Financial Group, LLC provides services
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
David I. Goldstein Vice President Counsel and General Counsel, Forum Financial
Born: August 3, 1961 Group LLC
Two Portland Square Officer of five other investment companies for
Portland, Maine 04101 which Forum Financial Group, LLC provides
services
-------------------------------------- --------------------------- ---------------------------------------------------
-------------------------------------- --------------------------- ---------------------------------------------------
Ronald H. Hirsch Treasurer Managing Director, Operations/Finance and
Born: October 14, 1943 Operations/Sales, Forum Financial Group, LLC
Two Portland Square since 1999
Portland, Maine 04101 Member of the Board - Citibank Germany 1991 - 1998
Officer of six other investment companies for
which Forum Financial Group, LLC provides services
-------------------------------------- --------------------------- ---------------------------------------------------
</TABLE>
15
<PAGE>
INVESTMENT ADVISER
SERVICES OF THE ADVISER
Forum Investment Advisors, LLC acts as the investment adviser to the Portfolio
pursuant to an investment advisory agreement (the "Agreement") with Core Trust.
Under the Agreement, the Adviser furnishes at its own expense all services,
facilities and personnel necessary in connection with managing the Portfolio's
investments and effecting portfolio transactions for the Portfolio. Since the
Portfolio's inception, Anthony R. Fischer, Jr., has been the portfolio manager
responsible for the day to day management of the Portfolio. Mr. Fischer has over
25 years of experience in the money market industry.
FEES
The Adviser's fees are calculated as a percentage of the Portfolio's average net
assets. The fee is accrued daily by the Portfolio and is paid monthly based on
average net assets for the previous month. The Fund pays its pro-rata portion of
the Portfolio's investment advisory fee.
Table 1 in Appendix C shows the dollar amount payable by the Portfolio to the
Adviser, the amount of fees waived by the Adviser, and the actual fee paid by
the Portfolio. The data are for the past three fiscal years (or shorter period
depending on the Fund's commencement of operations).
OTHER PROVISIONS OF ADVISER'S AGREEMENT
The Agreement must be approved at least annually by the Board, and by a majority
of the Trustees who are not parties to the agreement or interested persons of
any such party ("Disinterested Trustees").
The Agreement is terminable without penalty by Core Trust regarding the
Portfolio on 30 days' written notice when authorized either by vote of the
Fund's shareholders or by a majority vote of the Board, or by the Adviser on 90
days' written notice to the Trust. The Agreement terminates immediately upon
assignment.
Under the Agreement, the Adviser is not liable for any action or inaction in the
absence of bad faith, willful misconduct or gross negligence in the performance
of its duties.
DORMANT INVESTMENT ADVISER
Memorial Investment Advisors, Inc. ("MIA") has been retained as a "dormant" or
"back up" investment adviser to manage any assets redeemed and invested directly
by the Fund. MIA does not receive any compensation under this arrangement as
long as the Fund invests directly in the Portfolio. If the Fund redeems assets
from the Portfolio and invests them directly, MIA would receive an investment
advisory fee from the Fund for the management of those assets in the same amount
paid by the Portfolio to its adviser.
MIA is 100% owned by Christopher W. Hamm. MIA is registered as an investment
adviser with the SEC under the 1940 Act, as amended. Christopher W. Hamm is the
only officer of the Trust that is employed by MIA (or affiliates of MIA).
DISTRIBUTOR
SERVICES AND COMPENSATION OF DISTRIBUTOR
FFS, the distributor (also known as principal underwriter) of the shares of the
Fund, is located at Two Portland Square, Portland, Maine 04101. FFS is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
16
<PAGE>
Under a distribution agreement (the "Distribution Agreement") with the Trust,
FFS acts as the representative of the Trust in connection with the offering of
shares of the Fund. FFS continually distributes shares of the Fund on a best
effort basis. FFS has no obligation to sell any specific quantity of Fund
shares.
FFS may enter into arrangements with various financial institutions through
which you may purchase or redeem shares. FFS may, at its own expense and from
its own resources, compensate certain persons who provide services in connection
with the sale or expected sale of shares of the Fund.
FFS may enter into agreements with selected broker-dealers, banks or other
financial institutions for distribution of shares of the Fund. These financial
institutions may charge a fee for their services and may receive shareholder
service fees even though shares of the Fund are sold with sales charges or
distribution fees. These financial institutions may otherwise act as processing
agents and will be responsible for promptly transmitting purchase, redemption
and other requests to the Fund.
Investors who purchase shares in this manner will be subject to the procedures
of the institution through which they purchase shares, which may include
charges, investment minimums, cutoff times and other restrictions in addition
to, or different from, those listed herein. Information concerning any charges
or services will be provided to customers by the financial institution.
Investors purchasing shares of the Fund in this manner should acquaint
themselves with their institution's procedures and should read the Prospectus in
conjunction with any materials and information provided by their institution.
The financial institution and not its customers will be the shareholder of
record, although customers may have the right to vote shares depending upon
their arrangement with the institution.
FFS does not receive a fee for any distribution services performed under the
Distribution Agreement except the distribution service fees from the Trust with
respect to the shares of those classes for which a Plan (as defined below) is
effective.
OTHER PROVISIONS OF DISTRIBUTOR'S AGREEMENT
The Distribution Agreement must be approved at least annually by the Board or by
majority vote of the shareholders, and in either case by a majority of the
Disinterested Trustees.
The Distribution Agreement is terminable without penalty by the Trust with
respect to the Fund on 60 days' written notice when authorized either by vote of
the Fund's shareholders or by a majority vote of the Board, or by FFS on 60
days' written notice to the Trust.
Under the Distribution Agreement, FFS is not liable to the Trust or the Trust's
shareholders for any error of judgment or mistake of law, for any loss arising
out of any investment or for any act or omission in the performance of its
duties to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under the agreement.
Under the Distribution Agreement, FFS and certain related parties (such as FFS's
officers and persons that control FFS) are indemnified by the Trust against all
claims and expenses in any way related to alleged untrue statements of material
fact contained in the Fund's Registration Statement or any alleged omission of a
material fact required to be stated in the Registration Statement to make
statements contained therein not misleading. The Trust, however, will not
indemnify FFS for any such misstatements or omissions if they were made in
reliance upon information provided in writing by FFS in connection with the
preparation of the Registration Statement.
DISTRIBUTION PLAN - INSTITUTIONAL SHARE CLASS
In accordance with Rule 12b-1 under the 1940 Act, with respect to the Fund, the
Trust has adopted a distribution plan (the "Plan") which provides for the
payment to FFS of a Rule 12b-1 fee at the annual rate of up to 0.15% of the
average daily net assets of the Fund as compensation for FFS' services as
distributor.
17
<PAGE>
The Plan provides that FFS may incur expenses for such activities including, but
not limited to, (1) expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expense for services in
connection with the distribution of shares; (2) payments to broker-dealers and
financial institutions for services in connection with the distribution of
shares, including fees calculated with reference to the average daily net asset
value of shares held by shareholders who have a brokerage or other service
relationship with the broker-dealer of institution receiving such fees; (3)
costs of printing prospectuses and other materials to be given or sent to
prospective investors; and (4) the costs of preparing, printing and distributing
sales literature and advertising materials used by FFS or others in connection
with the offering of shares for sale to the public.
OTHER FUND SERVICE PROVIDERS
ADMINISTRATOR
THE TRUST As administrator, pursuant to an agreement with the Trust (the
"Administration Agreement"), FAdS is responsible for supervising the overall
management of the Trust, providing the Trust with general office facilities and
providing persons satisfactory to the Board to serve as officers of the Trust.
For its services, FAdS receives a fee from the Fund at an annual rate of 0.15%
of the average daily net assets of the Fund. The fee is accrued daily by the
Fund and is paid monthly based on average net assets for the previous month.
The Administration Agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Disinterested Trustees. The Administration Agreement is terminable without
penalty by the Trust or by FAdS with respect to a Fund on 60 days' written
notice.
Under the Administration Agreement, FAdS is not liable to the Trust or the
Trust's shareholders for any act or omission, except for willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreement. Under the
Administration Agreement, FAdS and certain related parties (such as FAdS's
officers and persons who control FAdS) are indemnified by the Trust against any
and all claims and expenses related to FAdS's actions or omissions that are
consistent with FAdS's contractual standard of care.
CORE TRUST FAdS also manages all aspects of Core Trust's operations with respect
to the Portfolio. With respect to the Portfolio, FAdS has entered into an
administration agreement ("Core Administration Agreement") that will continue in
effect only if such continuance is specifically approved at least annually by
the Core Trust Board or by the shareholders and, in either case, by a majority
of the Disinterested Trustees. Under the Core Administration Agreement, FAdS
performs similar services for the Portfolio to those provided to the Fund.
The Core Administration Agreement provides that FAdS shall not be liable to Core
Trust or any of Core Trust's interestholders for any action or inaction of FAdS
relating to any event whatsoever in the absence of bad faith, willful
misfeasance or gross negligence in the performance of FAdS' duties or
obligations under the Agreement or by reason of FAdS' reckless disregard of its
duties and obligations under this Agreement. The Administration Agreement may be
terminated with respect to a Portfolio at anytime, without the payment of any
penalty: (1) by the Core Trust Board on 60 days' written notice to FAdS; or (2)
by FAdS on 60 days' written notice to Core Trust.
FUND ACCOUNTANT
THE TRUST As fund accountant, pursuant to an accounting agreement with the Trust
(the "Accounting Agreement"), FAcS provides fund accounting services to the
Fund. These services include calculating the NAV per share of the Fund and
preparing the Fund's financial statements and tax returns.
18
<PAGE>
For its services, FAcS receives a fee from the Fund at an annual rate of $12,000
plus $1,500 for the preparation of tax returns and certain surcharges based upon
the number and type of the Fund's portfolio transactions and positions. The fee
is accrued daily by the Fund and is paid monthly based on the transactions and
positions for the previous month.
The Accounting Agreement must be approved at least annually by the Board or by
majority vote of the shareholders, and in either case by a majority of the
Disinterested Trustees. The Accounting Agreement is terminable without penalty
by the Trust or by FAcS with respect to the Fund on 60 days' written notice.
Under the Accounting Agreement, FAcS is not liable for any action or omission in
the performance of its duties to the Fund, except for willful misfeasance, bad
faith, gross negligence or by reason of reckless disregard of its obligations
and duties under the agreement. Under the Accounting Agreement, FAcS and certain
related parties (such as FAcS's officers and persons who control FAcS) are
indemnified by the Trust against any and all claims and expenses related to
FAcS's actions or omissions that are consistent with FAcS's contractual standard
of care.
Under the Accounting Agreement, in calculating the Fund's NAV per share, FAcS is
deemed not to have committed an error if the NAV per share it calculates is
within 1/10 of 1% of the actual NAV per share (after recalculation). The
Accounting Agreement also provides that FAcS will not be liable to a shareholder
for any loss incurred due to an NAV difference if such difference is less than
or equal 1/2 of 1% or less than or equal to $10. In addition, FAcS is not liable
for the errors of others, including the companies that supply securities prices
to FAcS and the Fund.
CORE TRUST FAcS performs similar services for the Portfolio pursuant to a
Portfolio and Unitholder Accounting Agreement ("Core Accounting Agreement"). The
Core Accounting Agreement shall continue in effect with respect to the Portfolio
until terminated; provided that continuance is specifically approved at least
annually by the Board. The Portfolio and Unitholder Accounting Agreement may be
terminated with respect to a Portfolio at any time, without the payment of any
penalty (1) by the Board on 60 days' written notice to FAcS or (2) by FAcS on 60
days' written notice to the Trust. FAcS is required to use its best judgment and
efforts in rendering fund accounting services and is not liable to Core Trust
for any action or inaction in the absence of bad faith, willful misconduct or
gross negligence.
TRANSFER AGENT
FSS, as transfer agent and distribution paying agent pursuant to a transfer
agency agreement with the Trust (the "Transfer Agency Agreement"), maintains an
account for each shareholder of record of the Fund and is responsible for
processing purchase and redemption requests and paying distributions to
shareholders of record. The Transfer Agent is located at Two Portland Square,
Portland, Maine 04101 and is registered as a transfer agent with the SEC.
For its services, the Transfer Agent receives with respect to the Fund 0.15% of
the average daily net assets of the Fund and $25.00 per shareholder account. The
fee is accrued daily by the Fund and is paid monthly based on the average net
assets for the previous month.
The Transfer Agency Agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Disinterested Trustees. The Transfer Agency Agreement is terminable without
penalty by the Trust or by the Transfer Agent with respect to the Fund on 60
days' written notice.
Under the Transfer Agency Agreement, the Transfer Agent is not liable for any
act in the performance of its duties to the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties
under the agreement. Under the Transfer Agency Agreement, the Transfer Agent and
certain related parties (such as the Transfer Agent's officers and persons who
control the Transfer Agent) are indemnified by the Trust against any and all
claims and expenses related to the Transfer Agent's actions or omissions that
are consistent with the Transfer Agent's contractual standard of care.
19
<PAGE>
CUSTODIAN
As custodian, pursuant to an agreement with the Core Trust, Union Bank of
California, N.A. safeguards and controls the Portfolio's cash and securities,
determines income and collects interest on Portfolio investments. The Custodian
may employ subcustodians to provide custody of the Portfolio's domestic and
foreign assets. The Custodian is located at 445 South Figueroa Street, 5th
Floor, Los Angeles, California 90007.
For its services, the Custodian receives an annualized percentage of the average
daily net assets of the Portfolio in which the Fund invests. The Portfolio also
pays an annual domestic custody fee as well as certain other transaction fees.
These fees are accrued daily by the Portfolio and are paid monthly based on
average net assets and transactions for the previous month.
LEGAL COUNSEL
Seward & Kissel LLP, 1200 G Street, N.W., Washington, D.C. 20005 passes upon
legal matters in connection with the issuance of shares of the Trust.
INDEPENDENT AUDITORS
KPMG, LLP, 99 High Street, Boston, MA 02110, is the independent auditor of the
Fund and the Portfolio. The auditor audits the annual financial statements of
the Fund and the Portfolio. The auditor also reviews the tax returns and certain
regulatory filings of the Fund and the Portfolio.
PORTFOLIO TRANSACTIONS
The Fund invests substantially all of its assets in the Portfolio and not
directly in portfolio securities. Therefore, the Fund does not pay brokerage
commissions directly.
Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
include the spread between the bid and asked price. There usually are no
brokerage commissions paid for any purchases. While the Trust does not
anticipate that the Portfolio will pay any amounts of brokerage commissions, in
the event the Portfolio pays brokerage commissions or other transaction-related
compensation, the payments may be made to broker-dealers who pay expenses of the
Portfolio that the Portfolio would otherwise be obligated to pay itself. All
transactions for which the Portfolio pays transaction-related compensation are
effected at the best price and execution available, taking into account the
amount of any payments made on behalf of the Portfolio by the broker-dealer
effecting the transaction.
Allocations of transactions to dealers and the frequency of transactions are
determined for the Portfolio by the Adviser in its best judgment and in a manner
deemed to be in the best interest of interestholders of the Portfolio rather
than by any formula. The primary consideration is prompt execution of orders in
an effective manner and at the most favorable price available to the Portfolio.
The Adviser monitors the creditworthiness of counterparties to the Portfolio's
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal and appropriate credit risks. No portfolio
transactions are executed with FIA or any of its affiliates.
OTHER ACCOUNTS OF THE ADVISER
Investment decisions for the Portfolio are made independently from those for any
other account or investment company that is or may in the future become managed
by the Adviser or its affiliates. Investment decisions are the product of many
20
<PAGE>
factors, including suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. In addition, two or more clients may
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as is possible, averaged as to price
and allocated between such clients in a manner which, in the Adviser's opinion,
is equitable to each and in accordance with the amount being purchased or sold
by each. There may be circumstances when purchases or sales of a portfolio
security for one client could have an adverse effect on another client that has
a position in that security. When purchases or sales of the same security for
the Portfolio and other client accounts managed by the Adviser occurs
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
GENERAL INFORMATION
You may purchase or redeem shares or request any shareholder privilege in person
at the offices of the Transfer Agent located at Two Portland Square, Portland,
Maine 04101.
The Fund accepts orders for the purchase or redemption of shares on each weekday
except on Federal holidays and other days that the Federal Reserve Bank of San
Francisco is closed ("Fund Business Days"). The Fund cannot accept orders that
request a particular day or price for the transaction or any other special
conditions.
ADDITIONAL PURCHASE INFORMATION
Shares of the Fund are sold on a continuous basis by the distributor.
The Fund reserves the right to refuse any purchase request. There is currently
no limit on exchanges, but the Fund reserves the right to limit exchanges.
Fund shares are normally issued for cash only. At the Adviser's discretion,
however, the Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
only accept securities that: (1) are not restricted as to transfer by law and
are not illiquid; and (2) have a value that is readily ascertainable (and not
established only by valuation procedures).
IRAS
All contributions into an IRA through systematic investments are treated as IRA
contributions made during the year the investment is received.
The Fund may be a suitable investment vehicle for part or all of the assets held
in Traditional or Roth Individual Retirement Accounts (collectively, "IRAs").
Call the Fund at 1-888-263-5593 to obtain an IRA account application. Generally,
all contributions and investment earnings in an IRA will be tax-deferred until
withdrawn. If certain requirements are met, investment earnings held in a Roth
IRA will not be taxed even when withdrawn. You may contribute up to $2,000
annually to an IRA. Only contributions to Traditional IRAs are tax-deductible.
However, that deduction may be reduced if you or your spouse is an active
participant in an employer-sponsored retirement plan and you have adjusted gross
income above certain levels. Your ability to contribute to a Roth IRA also may
be restricted if you or, if you are married, you and your spouse have adjusted
gross income above certain levels.
21
<PAGE>
Your employer may also contribute to your IRA as part of a Savings Incentive
Match Plan for Employees, or "SIMPLE plan," established after December 31, 1996.
Under a SIMPLE plan, you may contribute up to $6,000 annually to your IRA, and
your employer must generally match such contributions up to 3% of your annual
salary. Alternatively, your employer may elect to contribute to your IRA 2% of
the lesser of your earned income or $170,000.
This information on IRAs is based on regulations in effect as of January 1, 2000
and summarizes only some of the important federal tax considerations affecting
IRA contributions. These comments are not meant to be a substitute for tax
planning. Consult your tax advisors about your specific tax situation.
UGMAS/UTMAS
These custodial accounts provide a way to give money to a child and obtain tax
benefits. Depending on state laws, you can set up a custodial account under the
UGMA or the UTMA. If the trustee's name is not in the account registration of a
gift or transfer to minor ("UGMA/UTMA") account, the custodian must sign
instructions in a manner indicating trustee capacity.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Fund.
If you purchase shares through a financial institution, you will be subject to
the institution's procedures, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable when you invest in the Fund directly. When you purchase the Fund's
shares through a financial institution, you may or may not be the shareholder of
record and, subject to your institution's procedures; you may have Fund shares
transferred into your name. There is typically a three-day settlement period for
purchases and redemptions through broker-dealers. Certain financial institutions
may also enter purchase orders with payment to follow.
You may not be eligible for certain shareholder services when you purchase
shares through a financial institution. Contact your institution for further
information. If you hold shares through a financial institution, the Fund may
confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. The Fund is not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of the Fund through a financial institution should
read any materials and information provided by the financial institution to
acquaint themselves with its procedures and any fees that the institution may
charge.
SIGNATURE GUARANTEES
For requests made in writing, a signature guarantee is required for any of the
following:
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name
o Redemptions from an account for which the address or account
registration has changed within the last 30 days
o Sending redemption proceeds to any person, address, brokerage firm or
bank account not on record
o Sending redemption proceeds to an account with a different
registration (name or ownership) from yours
o Changes to systematic investment or withdrawal, distribution,
telephone redemption or exchange option or any other election in
connection with your account
22
<PAGE>
LOST ACCOUNTS
The Transfer Agent will consider your account lost if correspondence to your
address of record is returned as undeliverable, unless the Transfer Agent
determines your new address. When an account is lost, all distributions on the
account will be reinvested in additional Fund shares. In addition, the amount of
any outstanding (unpaid for six months or more) checks for distributions that
have been returned to the Transfer Agent will be reinvested and the checks will
be cancelled.
ADDITIONAL REDEMPTION INFORMATION
The Fund may redeem shares involuntarily to reimburse the Fund for any loss
sustained by reason of the failure of a shareholder to make full payment for
shares purchased by the shareholder or to collect any charge relating to
transactions effected for the benefit of a shareholder which is applicable to
the Fund's shares as provided in the Prospectus or herein.
A delay may occur in cases of very large redemptions, excessive trading or
during unusual market conditions. Normally, redemption proceeds are paid
immediately following receipt of a redemption order in proper form. In any
event, you will be paid within 7 days, unless: (1) your bank has not cleared the
check to purchase the shares (which may take up to 15 days); (2) the Federal
Reserve Bank of San Francisco is closed for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical for
the Fund to sell its portfolio securities or for the Fund to determine its net
asset value; or (4) the SEC deems it inappropriate for redemption proceeds to be
paid. You can avoid the delay of waiting for your bank to clear your check by
paying for shares with wire transfers. Unless otherwise indicated, redemption
proceeds normally are paid by check mailed to your record address.
SUSPENSION OF RIGHT OF REDEMPTION
The right of redemption may not be suspended, except for any period during
which: (1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted; (2) an emergency (as determined by the SEC) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or (3) the SEC may by order permit for
the protection of the shareholders of the Fund.
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<PAGE>
REDEMPTION-IN-KIND
Redemption proceeds normally are paid in cash. Payments may be made wholly or
partly in portfolio securities, however, if the Board determines conditions
exist which would make payment in cash detrimental to the best interests of the
Portfolio or if the amount to be redeemed is large enough to affect the
Portfolio's operations. If redemption proceeds are paid wholly or partly in
portfolio securities, shareholders may incur brokerage costs by converting the
securities to cash. The Trust has filed an election with the SEC pursuant to
which the Fund may only effect a redemption in portfolio securities if the
particular shareholder is redeeming more than $250,000 or 1% of the Fund's total
net assets, whichever is less, during any 90-day period.
NAV DETERMINATION
Pursuant to Rule 2a-7, the Board has established procedures to stabilize the
Fund's net asset value at $1.00 per share. These procedures include a review of
the extent of any deviation of net asset value per share as a result of
fluctuating interest rates, based on available market rates, from the Fund's
$1.00 amortized cost price per share. Should that deviation exceed 1/2 of 1%,
the Board will consider whether any action should be initiated to eliminate or
reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding distributions and utilizing a net asset value
per share as determined by using available market quotations. The Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less, will
not purchase any instrument with a remaining maturity greater than 397 days or
subject to a Repurchase Agreement having a duration of greater than 397 days,
will limit portfolio investments, including Repurchase Agreements, to those U.S.
dollar-denominated instruments that the Board has determined present minimal
credit risks and will comply with certain reporting and recordkeeping
procedures. The Trust has also established procedures to ensure that portfolio
securities meet the Fund's high quality criteria.
As described in the Prospectus, under certain circumstances the Fund may close
early and advance the time by which the Fund must receive a purchase or
redemption order and payments. In this case, if an investor places an order
after the cut-off time, the order will be processed on the follow-up business
day and your access to the Fund would be temporarily limited.
DISTRIBUTIONS
Distributions of net investment income will be reinvested at the Fund's NAV per
share as of the last business day of the period with respect to which the
distribution is paid. Distributions of capital gain will be reinvested at the
NAV per share of the Fund on the payment date for the distribution. Cash
payments may be made more than seven days following the date on which
distributions would otherwise be reinvested.
TAXATION
The tax information set forth in the Prospectus and the information in this
section relate solely to U.S. Federal income tax law and assumes that the Fund
qualifies as a regulated investment company (as discussed below). Such
information is only a summary of certain key Federal income tax considerations
affecting the Fund and its shareholders. No attempt has been made to present a
complete explanation of the Federal tax treatment of the Fund or the
implications to shareholders. The discussions here and in the prospectus are not
intended as substitutes for careful tax planning.
The tax-year end of the Fund is December 31 (the same as the Trust's fiscal year
end).
This "Taxation" section is based on the Code and applicable regulations in
effect on the date hereof. Future legislative or administrative changes or court
decisions may significantly change the tax rules applicable to the Fund and its
shareholders. Any of these changes or court decisions may have a retroactive
effect.
24
<PAGE>
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes. All investors should consult their own tax adviser as to the
Federal, state, local and foreign tax provisions applicable to them.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends for each tax year to qualify as a "regulated investment
company" under the Code. This qualification does not involve governmental
supervision of management or investment practices or policies of the Fund.
MEANING OF QUALIFICATION
As a regulated investment company, the Fund will not be subject to Federal
income tax on the portion of its investment company taxable income (that is,
taxable interest, short-term capital gains and other taxable ordinary income,
net of expenses) and net capital gain (that is, the excess of its net long-term
capital gain over its net short-term capital loss) that it distributes to
shareholders. In order to qualify as a regulated investment company the Fund
must satisfy the following requirements:
o The Fund must distribute at least 90% of its investment company taxable
income (and 90% of its tax-exempt interest income, net of expenses) for
the tax year. (Certain distributions made by the Fund after the close
of its tax year are considered distributions attributable to the
previous tax year for purposes of satisfying this requirement.)
o The Fund must derive at least 90% of its gross income from certain
types of income derived with respect to its business of investing in
securities.
o The Fund must satisfy the following asset diversification test at the
close of each quarter of the Fund's tax year: (1) at least 50% of the
value of the Fund's assets must consist of cash and cash items,
Government Securities, securities of other regulated investment
companies and securities of other issuers and (2) no more than 25% of
the value of the Fund's total assets may be invested in the securities
of any one issuer (other than Government Securities and securities of
other regulated investment companies) or in two or more issuers which
the Fund controls and which are engaged in the same or similar trades
or businesses.
The Portfolio is classified for Federal income tax purposes as a partnership and
is not subject to Federal income tax. Instead, each investor in the Portfolio
(including the Fund) is required to take into account in determining its Federal
income tax liability its share of the Portfolio's income, gain, loss, deduction
and credit. The Fund will be deemed to own a proportionate share of the
Portfolio's assets and to earn a proportionate share of the Portfolio's income.
FAILURE TO QUALIFY
If for any tax year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) will be subject to
tax at regular corporate rates without any deduction for dividends to
shareholders, and the distributions will be taxable to the shareholders as
ordinary income to the extent of the Fund's current and accumulated earnings and
profits. A portion of these distributions generally may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Failure to qualify as a regulated investment company would have a negative
impact on the Fund's income and performance. It is possible that the Fund will
not qualify as a regulated investment company in any given tax year.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its net investment income
for each tax year. The Fund expects to derive substantially all of its gross
25
<PAGE>
income (exclusive of capital gain) from sources other than dividends.
Accordingly, it is expected that none of the Fund's distributions will qualify
for the dividends-received deduction for corporations.
The Fund anticipates distributing substantially all of its net capital gain, if
any, for each tax year. These distributions generally are made only once a year,
but the Fund may make additional distributions of net capital gain at any time
during the year. These distributions are taxable to you as long-term capital
gain, regardless of how long you have held shares.
All distributions by the Fund will be treated in the manner described above
regardless of whether the distribution is paid in cash or reinvested in
additional shares of the Fund (or of another Fund). If you receive a
distribution in the form of additional shares, it will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.
Ordinarily, you are required to take distributions by the Fund into account in
the year in which they are made. A distribution declared in October, November or
December of any year and payable to shareholders of record on a specified date
in those months, however, is deemed to be received by you (and made by the Fund)
on December 31 of that calendar year even if the distribution is actually paid
in January of the following year.
You will be advised annually as to the U.S. Federal income tax consequences of
distributions made (or deemed made) during the year.
FEDERAL EXCISE TAX
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to: (1) 98% of its
ordinary taxable income for the calendar year; (2) 98% of its capital gain net
income for the one-year period ended on October 31 of the calendar year; and (3)
any ordinary taxable income or capital gain net income from the preceding
calendar year that was not distributed during that year. The Fund will be
treated as having distributed any amount on which it is subject to income tax
for any tax year.
For purposes of calculating the excise tax, the Fund reduces its capital gain
net income (but not below its net capital gain) by the amount of any net
ordinary loss for the calendar year.
The Fund intends to make sufficient distributions of its ordinary taxable income
and capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax. Investors should note, however, that the Fund
might in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
BACKUP WITHHOLDING
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of distributions, and the proceeds of redemptions of shares, paid
to any shareholder: (1) who has failed to provide a correct taxpayer
identification number; (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly; or (3)
who has failed to certify to the Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient." Backup
withholding is not an additional tax; any amounts so withheld may be credited
against a shareholder's Federal income tax liability or refunded.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from the Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
26
<PAGE>
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income distributions paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower applicable treaty rate) upon the gross amount of the distribution.
The foreign shareholder generally would be exempt from U.S. federal income tax
on gain realized on the sale of shares of the Fund and distributions of net
capital gain from the Fund.
In the case of a non-corporate foreign shareholder, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes the Fund with proper notification of its foreign
status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.
The tax rules of other countries with respect to distributions from the Fund can
differ from the rules from the U.S. Federal income taxation rules described
above. These foreign rules are not discussed herein. Foreign shareholders are
urged to consult their own tax advisers as to the consequences of foreign tax
rules with respect to an investment in the Fund.
STATE AND LOCAL TAXES
The tax rules of the various states of the U.S. and their local jurisdictions
with respect to distributions from the Fund can differ from the U.S. Federal
income taxation rules described above. These state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
consequences of state and local tax rules with respect to an investment in the
Fund.
OTHER MATTERS
THE TRUST AND ITS SHAREHOLDERS
GENERAL INFORMATION
The Trust was organized as a business trust under the laws of the State of
Delaware on November 26, 1997. The Trust has operated under that name and as an
investment company since that date.
The Trust is registered with the SEC as an open-end, management investment
company (a "mutual fund") under the 1940 Act. The Trust offers shares of
beneficial interest in its series. As of the date hereof, the Trust consisted of
the following shares of beneficial interest:
o Institutional Shares of each of Government Bond Fund, Corporate Bond Fund,
Growth Equity Fund and Value Equity Fund.
Each Fund is a series of Memorial Funds. It is not intended that meetings of
shareholders be held except when required by Federal or Delaware law. All
shareholders of each Fund are entitled to vote at shareholders' meetings unless
a matter is determined to affect only a specific Fund (such as approval of an
advisory agreement for a Fund). From time to time, large shareholders may
control a Fund or Memorial Funds. The Trust has an unlimited number of
authorized shares of beneficial interest. The Board may, without shareholder
approval, divide the authorized shares into an unlimited number of separate
series and may divide series into classes of shares; the costs of doing so will
be borne by the Trust.
Each Fund reserves the right to invest in one or more other investment companies
in a Core and Gateway(R) structure.
The Trust and each Fund will continue indefinitely until terminated.
Not all Funds of the Trust may be available for sale in the state in which you
reside. Please check with your investment professional to determine a Fund's
availability.
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<PAGE>
The Trust, the Adviser and FFS have adopted codes of ethics under Rule 17j-1 of
the 1940 Act which are designed to eliminate conflicts of interest between the
Funds and personnel of the Funds, the Adviser and FFS. The codes permit such
personnel to invest in securities, including securities that may be purchased or
held by the Funds.
SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust has equal dividend, distribution,
liquidation and voting rights, and fractional shares have those rights
proportionately. Generally, shares will be voted separately by individual series
except: (1) when required by applicable law, shares shall be voted in the
aggregate and not by individual series; and (2) when the Trustees have
determined that the matter affects the interests of more than one series, then
the shareholders of all such series shall be entitled to vote thereon. Delaware
law does not require the Trust to hold annual meetings of shareholders, and it
is anticipated that shareholder meetings will be held only when specifically
required by federal or state law. There are no conversion or preemptive rights
in connection with shares of the Trust.
All shares, when issued in accordance with the terms of the offering, will be
fully paid and non-assessable.
A shareholder in a series is entitled to the shareholder's pro rata share of all
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.
A shareholder or shareholders representing 33 1/3% or more of the outstanding
shares entitled to vote may, as set forth in the Trust Instrument, call meetings
of the Trust (or Fund) for any purpose related to the Trust (or Fund),
including, in the case of a meeting of the Trust, the purpose of voting on
removal of one or more Trustees.
CERTAIN REORGANIZATION TRANSACTIONS
The Trust or any Fund may be terminated upon the sale of its assets to, or
merger with, another open-end, management investment company or series thereof,
or upon liquidation and distribution of its assets. Generally such terminations
must be approved by the vote of the holders of a majority of the outstanding
shares of the Trust or the Fund. The Trustees may, without prior shareholder
approval: (1) cause the Trust or any Fund to merge or consolidate with or into
one or more entities, if the surviving or resulting entity is the Trust or
another company registered as an open-end, management investment company under
the 1940 Act, or a series thereof: (2) cause any or all shares to be exchanged
under or pursuant to any state or federal statute to the extent permitted by
law; or (3) cause the Trust to incorporate or organize under the laws of any
state, commonwealth, territory, dependence, colony or possession of the United
States of America or in any foreign jurisdiction.
FUND OWNERSHIP
As of November 7, 2000, the officers and trustees of the Trust as a group owned
no shares of the Funds.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote. As of November 7, 2000, and prior
to the public offering of the Fund, Forum Financial Group, LLC, beneficially
owned 100% of and may be deemed to control the Fund. It is unlikely, however,
that Forum Financial Group, LLC, a limited liability company organized under the
laws of Delaware, will continue to control the Fund. "Control" for these
purposes is the ownership of 25% or more of the Fund's voting securities.
28
<PAGE>
CONTROLLING PERSON INFORMATION
LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY
Delaware law provides that Fund shareholders are entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. In the past, the securities regulators of some states,
however, have indicated that they and the courts in their state may decline to
apply Delaware law on this point. The Trust Instrument contains an express
disclaimer of shareholder liability for the debts, liabilities, obligations and
expenses of the Trust and requires that a disclaimer be given in each bond, note
or contract, or other undertaking entered into or executed by the Trust or the
Trustees. The Trust's Trust Instrument (the document that governs the operation
of the Trust) provides that the shareholder, if held to be personally liable
solely by reason of being or having seen a shareholder of such series, shall be
entitled out of the assets the applicable series' property to be held harmless
from and indemnified against all losses and expenses arising from such
liability. The Trust Instrument also provides that each series shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the series and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which Delaware law does not apply, no contractual
limitation of liability was in effect, and the portfolio is unable to meet its
obligations. FAdS believes that, in view of the above, there is no risk of
personal liability to shareholders.
The Trust Instrument provides that the Trustees shall not be liable to any
person other than the Trust or its shareholders for any act, omission or
obligation of the Trust or any Trustee. In addition, the Trust Instrument
provides that the Trustees shall not be liable for any act, omission or any
conduct whatsoever in his capacity as a Trustee, provided that a Trustee is not
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered hereby. The registration statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by, the copy of such contract or other documents filed as exhibits
to the registration statement.
FINANCIAL STATEMENTS
Financial statements for the Fund are not included because the Fund had not
commenced operations prior to the date of this Statement of Additional
Information. Financial Statements for the Cash Portfolio are available free,
upon request
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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
MOODY'S
AAA Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present that make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
a ranking in the lower end of that generic rating category.
S&P
AAA An obligation rated AAA has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
NOTE Plus (+) or minus (-). The ratings from AA to A may be modified by
the addition of a plus or minus sign to show relative standing
within the major rating categories.
The `r' symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or
volatility of expected returns that are not addressed in the credit
rating. Examples include: obligations linked or indexed to equities,
currencies, or commodities; obligations exposed to severe prepayment
risk-such as interest-only or principal-only mortgage securities;
and obligations with unusually risky interest terms, such as inverse
floaters.
DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest but may
AA vary slightly from time to time because of economic conditions.
A-1
<PAGE>
FITCH
INVESTMENT GRADE
AAA
Highest credit quality. `AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA
Very high credit quality. `AA' ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely payment
of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A
High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
SHORT TERM RATINGS
MOODY'S
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
NOT PRIME
Issuers rated Not Prime do not fall within any of the Prime
rating categories.
S&P
A-1 A short-term obligation rated A-1 is rated in the highest
category by Standard & Poor's. The obligor's capacity to meet
its financial commitment on the obligation is strong. Within
this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial commitment
on the obligation is satisfactory.
A-2
<PAGE>
FITCH
F1 Obligations assigned this rating have the highest capacity for
timely repayment under Fitch IBCA's national rating scale for that
country, relative to other obligations in the same country. This
rating is automatically assigned to all obligations issued or
guaranteed by the sovereign state. Where issues possess a
particularly strong credit feature, a "+" is added to the assigned
rating.
F2 Obligations supported by a strong capacity for timely repayment
relative to other obligors in the same country. However, the
relative degree of risk is slightly higher than for issues
classified as `A1' and capacity for timely repayment may be
susceptible to adverse change sin business, economic, or financial
conditions.
F3 Obligations supported by an adequate capacity for timely repayment
relative to other obligors in the same country. Such capacity is
more susceptible to adverse changes in business, economic, or
financial conditions than for obligations in higher categories.
A-3
<PAGE>
APPENDIX C - MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES ($)
<TABLE>
GROSS FEE FEE WAIVED NET FEE PAID
CASH PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended August 31, 1999 266,660 0 266,660
Year ended August 31, 1998 158,716 0 158,716
Year ended August 31, 1997 72,872 0 72,872
<PAGE>
TABLE 3 - ADMINISTRATION FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
CASH PORTFOLIO
Year ended August 31, 1999 385,799 0 385,799
Year ended August 31, 1998 212,800 0 212,800
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
<PAGE>
TABLE 6 - FUND ACCOUNTING FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
CASH PORTFOLIO
Year ended August 31, 1999 49,500 0 49,500
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 14,957 27,043
<PAGE>
TABLE 7 - PORTFOLIO HOLDINGS IN DEALERS ($)
VALUE
CASH PORTFOLIO
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Copy of the Trust Instrument of the Registrant dated November 25, 1997
(Exhibit incorporated by reference as filed in initial Form N-1A on
December 4, 1997, accession number 0001004402-97-000244).
(b) Not Applicable.
(c) See Sections 2.02, 2.04 and 2.06 of the Trust Instrument filed as Exhibit
(a).
(d) (1) Investment Advisory Agreement between Registrant and Forum
Investment Advisors, LLC dated March 13, 1998 as amended June 29, 1999
(Exhibit incorporated by reference as filed in post-effective
amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(2) Investment Subadvisory Agreement between Registrant, Forum Investment
Advisors, LLC and PPM America, Inc. dated March 30, 2000 (Exhibit
incorporated by reference as filed in post-effective amendment No. 8
on April 28, 2000, accession number 0001004402-00-000129).
(3) Investment Subadvisory Agreement between Registrant, Forum Investment
Advisors, LLC and Conseco Capital Management, Inc. dated March 13,
1998 (Exhibit incorporated by reference as filed in post-effective
amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(4) Investment Subadvisory Agreement between Registrant, Forum Investment
Advisors, LLC and Davis Hamilton Jackson & Associates, L.P. dated
March 13, 1998 (Exhibit incorporated by reference as filed in
post-effective amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(5) Investment Subadvisory Agreement between Registrant, Forum Investment
Advisors, LLC and The Northern Trust Company dated March 13, 1998
(Exhibit incorporated by reference as filed in post-effective
amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(6) Form of Investment Advisory Agreement between Registrant and Memorial
Investment Advisors, Inc. (filed herewith)
(e) Distribution Agreement between Registrant and Forum Fund Services, LLC
dated as of May 1, 1999 (Exhibit incorporated by reference as filed in
post-effective amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(f) None.
(g) (1) Transfer Agency and Services Agreement between Registrant and
Forum Shareholder Services, LLC dated March 13, 1998 (Exhibit
incorporated by reference as filed in post-effective amendment No. 4
on April 29, 1999, accession number 0001004402-99-000244).
(2) Form of Custodian Agreement between Registrant and Investors Bank &
Trust Company (Exhibit incorporated by reference as filed in
post-effective amendment No. 7 on March 1, 2000, accession number
0001004402-00-000158).
(h) (1) Administration Agreement between Registrant and Forum
Administrative Services, LLC dated March 13, 1998 (Exhibit
incorporated by reference as filed in post-effective amendment No. 4
on April 29, 1999, accession number 0001004402-99-000244).
(2) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated March 13, 1998 (Exhibit incorporated by reference
as filed in post-effective amendment No. 4 on April 29, 1999,
accession number 0001004402-99-000244).
(3) Shareholder Service Agreement between Registrant and Memorial Group,
Inc., dated June 29, 1999 (Exhibit incorporated by reference as filed
in post-effective amendment No. 7 on March 1, 2000, accession number
0001004402-00-000158).
(4) Securities Lending Agency Agreement between Registrant and Investors
Bank & Trust Company dated January 31, 2000 (Exhibit incorporated by
reference as filed in post-effective amendment No. 7 on March 1, 2000,
accession number 0001004402-00-000158).
(i) (1) Opinion of counsel to Registrant (Exhibit incorporated by
reference as filed in post-effective amendment No. 1 on March 18,
1998, accession number 0001004402-98-000197).
<PAGE>
(2) Consent of Seward & Kissel, LLP (Exhibit incorporated by reference as
filed in post-effective amendment No. 4 on April 29, 1999, accession
number 0001004402-99-000244)
(j) Not applicable.
(k) None.
(l) Investment Representation letter of original purchaser of shares of
Registrant (Exhibit incorporated by reference as filed in post-effective
amendment No. 1 on March 18, 1998, accession number 0001004402-98-000197).
(m) Rule 12b-1 Plan (filed herewith).
(n) 18f-3 Plan adopted by Registrant (Exhibit incorporated by reference as
filed in post-effective amendment No. 4 on April 29, 1999, accession number
0001004402-99-000244).
(p) (1) Code of Ethics adopted by Registrant (Exhibit incorporated by
reference as filed in post-effective amendment No. 8 on April 28,
2000, accession number 0001004402-00-000129).
(2) Joint Code of Ethics adopted by Forum Investment Advisors, LLC and
Forum Fund Services, LLC (Exhibit incorporated by reference as filed
in post-effective amendment No. 8 on April 28, 2000, accession number
0001004402-00-000129).
(3) Code of Ethics adopted by PPM America, Inc. (filed herewith).
(4) Code of Ethics adopted by Conseco Capital Management, Inc. (Exhibit
incorporated by reference as filed in post-effective amendment No. 8
on April 28, 2000, accession number 0001004402-00-000129).
(5) Code of Ethics adopted by Davis Hamilton Jackson & Associates, L.P.
(Exhibit incorporated by reference as filed in post-effective
amendment No. 8 on April 28, 2000, accession number
0001004402-00-000129).
(6) Code of Ethics adopted by The Northern Trust Company (Exhibit
incorporated by reference as filed in post-effective amendment No. 8
on April 28, 2000, accession number 0001004402-00-000129).
(7) Code of Ethics adopted by Memorial Investment Advisors, Inc. (filed
herewith)
Other Exhibits:
Power of Attorney of Jay Brammer (Exhibit incorporated by reference as
filed in post-effective amendment No. 1 on March 18, 1998, accession
number 0001004402-98-000197).
Power of Attorney of J.B. Goodwin (Exhibit incorporated by reference
as filed in post-effective amendment No. 1 on March 18, 1998,
accession number 0001004402-98-000197).
Power of Attorney of Christopher W. Hamm (Exhibit incorporated by
reference as filed in post-effective amendment No. 1 on March 18,
1998, accession number 0001004402-98-000197).
Power of Attorney of Robert Stillwell (Exhibit incorporated by
reference as filed in post-effective amendment No. 1 on March 18,
1998, accession number 0001004402-98-000197).
Power of Attorney of John Y. Keffer (Exhibit incorporated by reference
as filed in post-effective amendment No. 1 on March 18, 1998,
accession number 0001004402-98-000197).
Power of Attorney for John Y. Keffer, James C. Cheng, Costas Azariadis
and J. Michael Parish, Trustees of Core Trust (Delaware) (Exhibit
incorporated by reference as filed in post-effective amendment No. 15
to the registration statement of Monarch Funds via EDGAR on December
19, 1997, accession number 0001004402-97-000264).
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
SECTION 10.02 of the Registrant's Trust Instrument provides as follows:
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b): (i) every Person who is, or has been, a Trustee or officer of
<PAGE>
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof; (ii) the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual or
threatened while in office or thereafter, and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or (ii)
in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office, (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a
full trial-type inquiry); provided, however, that any Shareholder may,
by appropriate legal proceedings, challenge any such determination by
the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a Person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a Person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other Persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in Subsection 10.02(a) may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount
will be paid over by him to the Trust or Series if it is ultimately
determined that he is not entitled to indemnification under this
Section 10.02; provided, however, that either (i) such Covered Person
shall have provided appropriate security for such undertaking, (ii) the
Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under Section 10.02.
Section 4 of the Investment Advisory Agreements provides in substance as
follows:
SECTION 4. STANDARD OF CARE
The Trust shall expect of the Adviser, and the Adviser will give the
Trust the benefit of, the Adviser's best judgment and efforts in
rendering its services to the Trust, and as an inducement to the
Adviser's undertaking these services the Adviser shall not be liable
hereunder for any mistake of judgment or in any event whatsoever,
except for lack of good faith, breach of fiduciary duty, willful
misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties hereunder, or by reason of the Adviser's reckless
disregard of its obligations and duties hereunder and except as
otherwise provided by law.
Section 3 of the Administration Agreement provides as follows:
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by
<PAGE>
Forum in writing. Forum shall use its best judgment and efforts in
rendering the services described in this Agreement. Forum shall not be
liable to the Trust or any of the Trust's shareholders for any action
or inaction of Forum relating to any event whatsoever in the absence of
bad faith, willful misfeasance or gross negligence in the performance
of Forum's duties or obligations under this Agreement or by reason of
Forum's reckless disregard of its duties and obligations under this
Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who
controls Forum within the meaning of section 15 of the Securities Act
or section 20 of the Securities Exchange Act of 1934, as amended,
("Forum Indemnitees") against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of or in any way related to Forum's actions taken
or failures to act with respect to a Fund that are consistent with the
standard of care set forth in Section 3(a) or based, if applicable, on
good faith reliance upon an item described in Section 3(d) (a "Claim").
The Trust shall not be required to indemnify any Forum Indemnitee if,
prior to confessing any Claim against the Forum Indemnitee, Forum or
the Forum Indemnitee does not give the Trust written notice of and
reasonable opportunity to defend against the claim in its own name or
in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all
claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of Forum's actions taken or
failures to act with respect to a Fund that are not consistent with the
standard of care set forth in Section 3(a). Forum shall not be required
to indemnify the Trust if, prior to confessing any Claim against the
Trust, the Trust does not give Forum written notice of and reasonable
opportunity to defend against the claim in its own name or in the name
of the Trust.
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to
the Trust or counsel to Forum, and upon statements of accountants,
brokers and other persons reasonably believed in good faith by
Forum to be experts in the matter upon which they are consulted;
(ii) any oral instruction which it receives and which it
reasonably believes in good the person or persons transmitted
faith authorized by the Board to give such oral instruction. Forum
shall have no duty or obligation to make any inquiry or effort of
certification of such oral instruction;
(iii) any written instruction or certified copy of any resolution
of the Board, and Forum may rely upon the genuineness of any such
document or copy thereof reasonably believed in good faith by
Forum to have been validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other document reasonably believed in
good faith by Forum to be genuine and to have been signed or
presented by the Trust or other proper party or parties; and no
Forum Indemnitee shall be under any duty or obligation to inquire
into the validity or invalidity or authority or lack thereof of
any statement, oral or written instruction, resolution, signature,
request, letter of transmittal, certificate, opinion of counsel,
instrument, report, notice, consent, order, or any other document
or instrument which Forum reasonably believes in good faith to be
genuine.
(e) Forum shall not be liable for the errors of other service
providers to the Trust including the errors of printing services
(other than to pursue all reasonable claims against the pricing
service based on the pricing services' standard contracts entered
into by Forum) and errors in information provided by an investment
adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to
the Trust.
Sections 7 and 8 of the Distribution Agreement provide:
SECTION 7. STANDARD OF CARE
(a) The Distributor shall use its best judgment and reasonable efforts
in rendering services to the Trust under this Agreement but shall be
<PAGE>
under no duty to take any action except as specifically set forth
herein or as may be specifically agreed to by the Distributor in
writing. The Distributor shall not be liable to the Trust or any of the
Trust's shareholders for any error of judgment or mistake of law, for
any loss arising out of any investment, or for any action or inaction
of the Distributor in the absence of bad faith, willful misfeasance or
gross negligence in the performance of the Distributor's duties or
obligations under this Agreement or by reason or the Distributor's
reckless disregard of its duties and obligations under this Agreement
(b) The Distributor shall not be liable for any action taken or failure
to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to
the Trust or counsel to the Distributor;
(ii) any oral instruction which it receives and which it
reasonably believes in good faith was transmitted by the person or
persons authorized by the Board to give such oral instruction (the
Distributor shall have no duty or obligation to make any inquiry
or effort of certification of such oral instruction);
(iii) any written instruction or certified copy of any resolution
of the Board, and the Distributor may rely upon the genuineness of
any such document or copy thereof reasonably believed in good
faith by the Distributor to have been validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other document reasonably believed in
good faith by the Distributor to be genuine and to have been
signed or presented by the Trust or other proper party or parties;
and the Distributor shall not be under any duty or obligation to
inquire into the validity or invalidity or authority or lack
thereof of any statement, oral or written instruction, resolution,
signature, request, letter of transmittal, certificate, opinion of
counsel, instrument, report, notice, consent, order, or any other
document or instrument which the Distributor reasonably believes
in good faith to be genuine.
(c) The Distributor shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its
reasonable control including, without limitation, acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdowns, flood or catastrophe, acts of God, insurrection,
war, riots or failure of the mails, transportation, communication or
power supply. In addition, to the extent the Distributor's obligations
hereunder are to oversee or monitor the activities of third parties,
the Distributor shall not be liable for any failure or delay in the
performance of the Distributor's duties caused, directly or indirectly,
by the failure or delay of such third parties in performing their
respective duties or cooperating reasonably and in a timely manner with
the Distributor.
SECTION 8. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold the Distributor, its
employees, agents, directors and officers and any person who controls
the Distributor within the meaning of section 15 of the Securities Act
or section 20 of the 1934 Act ("Distributor Indemnitees") free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable
counsel fees and other expenses of every nature and character
(including the cost of investigating or defending such claims, demands,
actions, suits or liabilities and any reasonable counsel fees incurred
in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out
of or based upon any alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectuses or arising
out of or based upon any alleged omission to state a material fact
required to be stated in any one thereof or necessary to make the
statements in any one thereof not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished in writing to the Trust in connection with the preparation of
the Registration Statement or exhibits to the Registration Statement by
or on behalf of the Distributor ("Distributor Claims").
After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee
free and harmless from and against any Distributor Claim; provided,
<PAGE>
that the term Distributor Claim for purposes of this sentence shall
mean any Distributor Claim related to the matters for which the
Distributor has requested amendment to the Registration Statement and
for which the Trust has not filed a Required Amendment, regardless of
with respect to such matters whether any statement in or omission from
the Registration Statement was made in reliance upon, or in conformity
with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the
Trust and approved by the Distributor, which approval shall not be
withheld unreasonably. The Trust shall advise the Distributor that it
will assume the defense of the suit and retain counsel within ten (10)
days of receipt of the notice of the claim. If the Trust assumes the
defense of any such suit and retains counsel, the defendants shall bear
the fees and expenses of any additional counsel that they retain. If
the Trust does not assume the defense of any such suit, or if
Distributor does not approve of counsel chosen by the Trust or has been
advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust
will reimburse any Distributor Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person
retains. A Distributor Indemnitee shall not settle or confess any claim
without the prior written consent of the Trust, which consent shall not
be unreasonably withheld or delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"),
free and harmless from and against any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable
counsel fees incurred in connection therewith), but only to the extent
that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other
expenses result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in
the Registration Statement or Prospectus or any alleged omission
of a material fact required to be stated or necessary to make the
statements therein not misleading, if such statement or omission
was made in reliance upon, and in conformity with, information
furnished to the Trust in writing in connection with the
preparation of the Registration Statement or Prospectus by or on
behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set
forth in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen
by the Distributor and approved by the Trust, which approval shall not
be withheld unreasonably. The Distributor shall advise the Trust that
it will assume the defense of the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If the Distributor
assumes the defense of any such suit and retains counsel, the
defendants shall bear the fees and expenses of any additional counsel
that they retain. If the Distributor does not assume the defense of any
such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or
claims that are not available to or conflict with those available to
the Distributor, the Distributor will reimburse any Trust Indemnitee
named as defendant in such suit for the reasonable fees and expenses of
any counsel that person retains. A Trust Indemnitee shall not settle or
confess any claim without the prior written consent of the Distributor,
which consent shall not be unreasonably withheld or delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a
Distributor Indemnitee or Trust Indemnitee, respectively, by the person
against whom such action is brought within twenty (20) days after the
summons or other first legal process is served. Such notice shall refer
to the person or persons against whom the action is brought. The
failure to provide such notice shall not relieve the party entitled to
such notice of any liability that it may have to any Distributor
Indemnitee or Trust Indemnitee except to the extent that the ability of
the party entitled to such notice to defend such action has been
materially adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Distributor Indemnitee or Trust Indemnitee and shall survive the sale
and redemption of any Shares made pursuant to subscriptions obtained by
<PAGE>
the Distributor. The indemnification provisions of this Section will
inure exclusively to the benefit of each person that may be a
Distributor Indemnitee or Trust Indemnitee at any time and their
respective successors and assigns (it being intended that such persons
be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware
arising out of or in any way connected with the issuance or sale of
Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable
statute or regulation or shall require the Distributor to take any
action contrary to any provision of its Articles of Incorporation or
Bylaws or any applicable statute or regulation; provided, however, that
neither the Trust nor the Distributor may amend their Organic Documents
or Articles of Incorporation and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made
in this Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders
to which the Distributor would otherwise be subject by reason of its
failure to satisfy the standard of care set forth in Section 7 of this
Agreement.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Forum Investment Advisors, LLC
The descriptions of Forum Investment Advisors, LLC under the caption
"Management-Adviser" in the Prospectus and Statement of Additional
Information of this amendment to the Trust's registration statement and
in the Prospectus and Statement of Additional Information relating to
Government Bond Fund, Corporate Bond Fund, Value Equity Fund and Growth
Equity Fund, constituting certain of Parts A and B, respectively, of
post-effective amendment No. 8 to the Trust's registration statement
(accession number 0001004402-00-0001290) are incorporated by reference
herein.
The following are the members of Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101, including their business
connections, which are of a substantial nature.
Forum Holdings Corp. I., Member.
Forum Trust, LLC, Member.
Both Forum Holdings Corp. I. and Forum Trust are controlled indirectly
by John Y. Keffer, President of Forum Trust and Forum Financial Group,
LLC. Mr. Keffer is also a director and/or officer of various
registered investment companies for which the various Forum Financial
Group's operating subsidiaries provide services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial nature.
Each officer may serve as an officer of various registered investment
companies for which the Forum Financial Group provides services.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ..................................
David I. Goldstein Secretary Forum Investment Advisors, LLC
................................... ..................................
................................... ..................................
General Counsel Forum Financial Group, LLC
................................... ..................................
................................... ..................................
Officer other Forum affiliated companies
.................................... ................................... ..................................
.................................... ................................... ..................................
Marc D. Keffer Assistant Secretary Forum Investment Advisors, LLC
................................... ..................................
................................... ..................................
Corporate Counsel Forum Financial Group, LLC
................................... ..................................
................................... ..................................
Officer other Forum affiliated companies
</TABLE>
<PAGE>
(b) The Northern Trust Company
The descriptions of The Northern Trust Company ("NTC") under the
caption "Management-Adviser" in the Prospectus and Statement of
Additional Information relating to Government Bond Fund constituting
certain of Parts A and B, respectively, of post-effective amendment No.
8 to the Trust's registration statement (accession number
0001004402-00-0001290) are incorporated by reference herein.
The following are the directors and officers of NTC, 50 South LaSalle
Street, Chicago, Illinois, 60675, including any business connections of
a substantial nature, which they have had in the past two (2) fiscal
years. Unless otherwise indicated, the business address of each
business connection is 50 South LaSalle Street, Chicago, Illinois.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ..................................
Duane L. Burnham Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Retired Chairman of the Board and Abbott Laboratories
Chief Executive Officer 150 Field Drive
Suite 160
Lake Forest, Illinois 60045
................................... ..................................
................................... ..................................
Director Sara Lee Corporation
3 First National Plaza
Chicago, Illinois 60602
.................................... ................................... ..................................
.................................... ................................... ..................................
Dolores E. Cross Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
President (6/99) Morris Brown College
Administration Building, 2nd Fl
643 Martin Luther King, Jr. Dr.
Atlanta, Georgia 30314
................................... ..................................
................................... ..................................
GE Fund Distinguished Professor The Graduate School and
of Leadership and Diversity - University Center
July 1998 to June 1999 The City University of NY
33 W 42nd Street, Room 1400N
New York, New York 10036
................................... ..................................
................................... ..................................
Former President, GE Fund General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06432
................................... ..................................
................................... ..................................
Chicago State University Former President
95th Street at King Drive
Chicago, Illinois 60643
.................................... ................................... ..................................
.................................... ................................... ..................................
Susan Crown Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Vice President Henry Crown and Company
222 N. LaSalle Street
Suite 2000
Chicago, IL 60601
................................... ..................................
................................... ..................................
Director Baxter International, Inc.
One Baxter Parkway
Deerfield, Illinois 60015
................................... ..................................
................................... ..................................
Director Illinois Tool Works, Inc.
3600 W. Lake Avenue
Glenview, Illinois 60025
.................................... ................................... ..................................
.................................... ................................... ..................................
John R. Goodwin Senior Vice President NTC
................................... ..................................
................................... ..................................
Director, Managing Director and NTQA
Chief Investment Officer
<PAGE>
.................................... ................................... ..................................
.................................... ................................... ..................................
Robert S. Hamada Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Dean, Edward Eagle Brown University of Chicago Graduate
Distinguished Service Professor School of Business
of Finance 1101 East 58th Street
Chicago, Illinois 60637
................................... ..................................
................................... ..................................
Director A.M. Castle & Co.
3400 North Wolf Road
Franklin Park, Illinois 60131
................................... ..................................
................................... ..................................
Director Chicago Board of Trade
141 West Jackson Boulevard
Chicago, Illinois 60604
.................................... ................................... ..................................
.................................... ................................... ..................................
Barry G. Hastings President, Chief Operating NTC
Officer and Director
................................... ..................................
................................... ..................................
President, Chief Operating Northern Trust Corporation
Officer and Director
................................... ..................................
................................... ..................................
Director Northern Trust of Florida
Corporation
700 Brickell Avenue
Miami, Florida 33131
................................... ..................................
................................... ..................................
Director Northern Trust of California
Corporation,
355 S. Grand Avenue
Los Angeles, California 90017
................................... ..................................
................................... ..................................
Vice Chairman of the Board & Northern Trust of Florida
Director Corporation, 700 Brickell
Avenue, Miami, FL 33131
................................... ..................................
................................... ..................................
Director Nortrust Realty Management, Inc.
.................................... ................................... ..................................
.................................... ................................... ..................................
Robert A. Helman Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Partner Mayer, Brown & Platt
190 S. LaSalle Street, 38th Fl.
Chicago, Illinois 60603
................................... ..................................
................................... ..................................
Governor Chicago Stock Exchange
One Financial Plaza
440 S. LaSalle Street
Chicago, Illinois 60605
................................... ..................................
................................... ..................................
Director TC PipeLines GP
TransCanada PipeLines Tower
111 - 5th Avenue S.W.
Calgary, Alberta, Canada T2P 3Y6
................................... ..................................
................................... ..................................
Director Dreyer's Grand Ice Cream, Inc.
5929 College Avenue
Oakland, California 94618
................................... ..................................
................................... ..................................
Director Brambles USA, Inc.
400 N. Michigan Avenue
Chicago, IL 60611
<PAGE>
.................................... ................................... ..................................
.................................... ................................... ..................................
Arthur L. Kelly Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Managing Partner KEL Enterprises L.P.
Two First National Plaza
20 S. Clark Street, Suite 2222
Chicago, Illinois 60603
................................... ..................................
................................... ..................................
Director Bayerische Motoren Werke (BMW)
A.G. BMW Haus
Petuelring 130
Postfach 40 02 40
D-8000
Munich 40 Germany
................................... ..................................
................................... ..................................
Director Deere & Company
John Deere Road
Moline, IL 61265
................................... ..................................
................................... ..................................
Director Thyssen-Krupp Industries AG
Am Thyssenhaus 1
45128 Essen
Germany
................................... ..................................
................................... ..................................
Director Snap-on Incorporated
2801 80th Street
Kenosha, Wisconsin 53140
................................... ..................................
.................................... ................................... ..................................
Frederick A. Krehbiel Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Chairman, Chief Executive Officer Molex Incorporated
and Director 2222 Wellington Court
Lisle, Illinois 60532-1682
................................... ..................................
................................... ..................................
Director DeVry, Inc.
One Tower Lane
Oakbrook Terrace, Illinois 60181
................................... ..................................
................................... ..................................
Director Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532
.................................... ................................... ..................................
.................................... ................................... ..................................
Robert A. LaFleur Senior Vice President NTC
.................................... ................................... ..................................
.................................... ................................... ..................................
James J. Mitchell, III President - Worldwide Operations NTC
and Technology and Executive Vice
President
................................... ..................................
................................... ..................................
Director The Northern Trust Company of
New York
40 Broad Street, 8th Fl.
New York, New York 10004
.................................... ................................... ..................................
.................................... ................................... ..................................
William G. Mitchell Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Director Peoples Energy Corporation
122 South Michigan Avenue
Chicago, Illinois 60603
................................... ..................................
................................... ..................................
Director The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115-1075
................................... ..................................
<PAGE>
.................................... ................................... ..................................
Edward J. Mooney Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Chairman, Chief Executive Nalco Chemical Company
Officer, President and Director One Nalco Center
Naperville, Illinois 60563-1198
................................... ..................................
................................... ..................................
Director FMC Corporation
200 East Randolph
Chicago, IL 60601
.................................... ................................... ..................................
.................................... ................................... ..................................
William A. Osborn Chairman and Chief Executive NTC
Officer
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Director NICOR, Inc.
1844 Ferry Road
Naperville, Illinois 60566
................................... ..................................
................................... ..................................
Director Nortrust Realty Management Inc.
................................... ..................................
................................... ..................................
Director Northern Futures Corporation
.................................... ................................... ..................................
.................................... ................................... ..................................
Sheila A. Penrose President - Corporate and NTC
Institutional Services and
Executive Vice President
................................... ..................................
................................... ..................................
Director Northern Trust Global Advisors,
Inc.
29 Federal Street
Stamford, Connecticut 06901
................................... ..................................
................................... ..................................
Manager Northern Trust Retirement
Consulting
400 Perimeter Center Terrace
Suite 850
Atlanta, Georgia 30346
................................... ..................................
................................... ..................................
Director NTQA
.................................... ................................... ..................................
.................................... ................................... ..................................
Perry R. Pero Vice Chairman and Chief Financial NTC
Officer
................................... ..................................
................................... ..................................
President and Director Northern Futures Corporation
................................... ..................................
................................... ..................................
President and Director Northern Investment Corporation
................................... ..................................
................................... ..................................
Director Northern Trust Global Advisors,
Inc.
29 Federal Street
Stamford, Connecticut 06901
................................... ..................................
................................... ..................................
Director Northern Trust Securities, Inc.
................................... ..................................
................................... ..................................
Director Nortrust Realty Management, Inc.
................................... ..................................
................................... ..................................
Director NTQA
.................................... ................................... ..................................
................................... ..................................
Stephen N. Potter Senior Vice President NTC
................................... ..................................
................................... ..................................
Director, Managing Director NTQA
.................................... ................................... ..................................
<PAGE>
.................................... ................................... ..................................
Peter L. Rossiter Executive Vice President and NTC
General Counsel
.................................... ................................... ..................................
.................................... ................................... ..................................
Harold B. Smith Director NTS
.................................... ................................... ..................................
.................................... ................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Chairman of the Executive Illinois Tool Works Inc.
Committee and Director 3600 West Lake Avenue
Glenview, IL 60025-5811
................................... ..................................
................................... ..................................
Director W. W. Grainger, Inc.
5500 West Howard Street
Skokie, IL 60077
................................... ..................................
................................... ..................................
Trustee Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
.................................... ................................... ..................................
.................................... ................................... ..................................
William D. Smithburg Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Retired Chairman, President and The Quaker Oats Company
Chief Executive Officer 321 North State Street
Chicago, Illinois 60610
................................... ..................................
................................... ..................................
Director Abbott Laboratories
One Abbott Park Road
Abbott Park, Illinois 60675
................................... ..................................
................................... ..................................
Director Corning Incorporated
Corning, NY 14831
................................... ..................................
................................... ..................................
Trustee Prime Capital Corporation
10275 West Higgins Road
Suite 200
Rosemont, Illinois 60018
.................................... ................................... ..................................
.................................... ................................... ..................................
James M. Snyder Executive Vice President NTC
................................... ..................................
................................... ..................................
Director Northern Trust Global Advisors,
Inc.
29 Federal Street
Stamford, Connecticut 06901
................................... ..................................
................................... ..................................
Chairman CEO and Director NTQA
.................................... ................................... ..................................
.................................... ................................... ..................................
Bide L. Thomas Director NTC
................................... ..................................
................................... ..................................
Director Northern Trust Corporation
................................... ..................................
................................... ..................................
Director MYR Group Inc.
(formerly L.E. Myers Company)
2550 West Golf Road
Rolling Meadows, Illinois 60008
................................... ..................................
................................... ..................................
Director R. R. Donnelley & Sons Company
77 West Wacker Drive
Chicago, Illinois 60601
.................................... ................................... ..................................
<PAGE>
.................................... ................................... ..................................
Stephen B. Timbers President - Northern Trust Global NTC
Investments and Executive Vice
President
................................... ..................................
................................... ..................................
Director Northern Trust Global Advisors,
Inc.
29 Federal Street
Stamford, Connecticut 06901
................................... ..................................
................................... ..................................
Former President and CEO Zurich-Kemper Investments
222 Riverside Plaza
Chicago, Illinois 60606
................................... ..................................
................................... ..................................
Director LTV Steel Company
200 Public Square
Cleveland, Ohio 44114-2308
................................... ..................................
................................... ..................................
Director NTQA
................................... ..................................
................................... ..................................
President and Director Northern Investment Management
Company
.................................... ................................... ..................................
.................................... ................................... ..................................
Jeffrey H. Wessel Executive Vice President NTC
................................... ..................................
................................... ..................................
President and Director NTQA
................................... ..................................
................................... ..................................
Director Northern Trust Global Advisors,
Inc.
29 Federal Street
Stamford, Connecticut 06901
................................... ..................................
................................... ..................................
Manager Northern Trust Retirement
Consulting
401 Perimeter Center Terrace
Suite 850
Atlanta, Georgia 30346
</TABLE>
(c) Conseco Capital Management, Inc
The descriptions of Conseco Capital Management, Inc., ("CCM") under the
caption "Management-Adviser" in the Prospectus and Statement of
Additional Information relating to Corporate Bond Fund constituting
certain of Parts A and B, respectively, of post-effective amendment No.
8 to the Trust's registration statement (accession number
0001004402-00-0001290) are incorporated by reference herein.
The following are the directors and officers of CCM, 11825 N.
Pennsylvania Street, Carmel, Indiana 46032, including any business
connections of a substantial nature, which they have had in the past
two (2) fiscal years. Unless otherwise indicated, the address of each
company listed is 11825 N. Pennsylvania Street, Carmel, Indiana 46032.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ..................................
Nora Ann Bammann Vice President CCM
.................................... ................................... ..................................
.................................... ................................... ..................................
Maxwell Bublitz President, Chief Executive CCM
Officer and Director
.................................... ................................... ..................................
.................................... ................................... ..................................
Andrew S. Chow Vice President CCM
.................................... ................................... ..................................
.................................... ................................... ..................................
Rollin M. Dick Director CCM
................................... ..................................
................................... ..................................
Executive Officer and Director Various affiliates of Conseco,
Inc.
................................... ..................................
................................... ..................................
Director Brightpoint, Inc.
6042 Corporate Drive
Indianapolis, Indiana 46278
................................... ..................................
.................................... ................................... ..................................
John Robert Kline Chief Financial Officer, CCM
Treasurer and Vice President
.................................... ................................... ..................................
.................................... ................................... ..................................
Thomas Meyers Senior Vice President, Director CCM
of Marketing
................................... ..................................
................................... ..................................
Senior Vice President Conseco Mortgage Capital, Inc.
.................................... ................................... ..................................
.................................... ................................... ..................................
Thomas J. Pence Senior Vice President CCM
.................................... ................................... ..................................
.................................... ................................... ..................................
See Yeng Quek Vice President CCM
.................................... ................................... ..................................
<PAGE>
.................................... ................................... ..................................
Gregory Hahn Senior Vice President, Portfolio CCM
Manager
.................................... ................................... ..................................
.................................... ................................... ..................................
William P. Kovacs Director, Vice President, Chief CCM
Compliance Officer and Secretary
................................... ..................................
................................... ..................................
Director, Vice President and Conseco Equity Sales, Inc.
Secretary
................................... ..................................
................................... ..................................
Director, Vice President and Conseco Securities, Inc.
Secretary
.................................... ................................... ..................................
.................................... ................................... ..................................
John R. Kline Vice President, Finance and CCM
Treasurer
................................... ..................................
................................... ..................................
Vice President, Corporate Finance Conseco Services, LLC
.................................... ................................... ..................................
.................................... ................................... ..................................
Jude T. Driscoll Vice President, Portfolio CCM
Management and Trading
................................... ..................................
................................... ..................................
Trader Previously, Nations Bank,
Charlotte, North Carolina
.................................... ................................... ..................................
.................................... ................................... ..................................
Todd C. Thompson Second Vice President CCM
................................... ..................................
................................... ..................................
Assistant Investment Officer Previously, Public Employees
Retirement Systems of Ohio
.................................... ................................... ..................................
.................................... ................................... ..................................
William T. Lissenden Director of Research CCM
................................... ..................................
................................... ..................................
Director, Taxable Fixed Income Previously, Prudential
Research and Product Management Securities, Inc., New York, New
York
</TABLE>
Information as to the officers and directors of CCM is included in its
current Form ADV filed with the SEC and is incorporated by reference
herein.
(d) Davis Hamilton Jackson & Associates, L.P.
The descriptions of Davis Hamilton Jackson & Associates, L.P., ("DHJA")
under the caption "Management-Adviser" in the Prospectus and Statement
of Additional Information relating to Growth Equity Fund constituting
certain of Parts A and B, respectively, of post-effective amendment No.
8 to the Trust's registration statement (accession number
0001004402-00-0001290) are incorporated by reference herein.
The following are the directors and officers of DHJA Two Houston
Center, 909 Fannin, Suite 550, Houston, Texas 77010, including any
business connections of a substantial nature which they have had in the
past two (2) fiscal years.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... .................................... .................................
Jack R. Hamilton President and Limited Partner DHJA
.................................... .................................... .................................
.................................... .................................... .................................
Robert C. Davis Secretary and Limited Partner DHJA
.................................... .................................... .................................
.................................... .................................... .................................
Alfred Jackson Limited Partner DHJA
.................................... .................................... .................................
.................................... .................................... .................................
Carla J. Evans Vice President - Administration DHJA
.................................... .................................... .................................
.................................... .................................... .................................
Jeffrey L. Sarff Chief Operating Officer and DHJA
Limited Partner
.................................... .................................... .................................
.................................... .................................... .................................
J. Patrick Clegg Limited Partner DHJA
.................................... .................................... .................................
.................................... .................................... .................................
James P. Webb Limited Partner DHJA
.................................... .................................... .................................
.................................... .................................... .................................
Catherine S. Woodruff Limited Partner DHJA
.................................... .................................... .................................
</TABLE>
(e) PPM America, Inc.
The descriptions of PPM America, Inc. ("PPM") under the caption
"Management-Adviser" in the Prospectus and Statement of Additional
Information relating to Value Equity Fund, constituting certain of
Parts A and B, respectively, of post-effective amendment No. 8 to the
Trust's registration statement (accession number
0001004402-00-0001290)are incorporated by reference herein.
<PAGE>
The following are the directors and officers of PPM, 225 West Wacker
Drive, Suite 1200, Chicago, Illinois 60606, including any business
connections of a substantial nature, which they have had in the past
two (2) years. Unless otherwise indicated, the address of each company
listed is 225 West Wacker Drive, Suite 1200, Chicago, Illinois 60606.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ...................................
.................................... ................................... ...................................
Russell William Swanson President and Director PPM
.................................... ................................... ...................................
.................................... ................................... ...................................
Mark Bernard Mandich Executive Vice President, PPM
Secretary, Chief Compliance
Officer and Director
.................................... ................................... ...................................
.................................... ................................... ...................................
Fred John Stark III Executive Vice President, PPM
Secretary, Counsel and Director
</TABLE>
(f) Memorial Investment Advisors, Inc.
The descriptions of Memorial Investment Advisors, Inc. under the
caption "Management-Adviser" in the Prospectuses and Statement of
Additional Information relating to Daily Cash Fund, constituting
certain of Parts A and B, respectively, of the Registration Statement
are incorporated by reference herein.
The following are the directors and officers of Memorial Investment
Advisors, Inc., 5847 San Felipe, Suite 875 Houston, TX 77057, including
any business connections of a substantial nature, which they have had
in the past two (2) years. Unless otherwise indicated, the address of
each company listed is 5847 San Felipe, Suite 875, Houston, TX 77057.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ...................................
.................................... ................................... ...................................
Christopher W. Hamm President Memorial Investment Advisors,
Inc.
................................... ...................................
................................... ...................................
President CapRock Financial Group
................................... ...................................
................................... ...................................
President CapRock Management Corp.
................................... ...................................
................................... ...................................
President Memorial Group, Inc.
................................... ...................................
................................... ...................................
President Service Financial Group, Inc.
................................... ...................................
................................... ...................................
Director Cypress Mortgage Corp., Austin,
Texas
................................... ...................................
................................... ...................................
Director Hamm Corp.
................................... ...................................
................................... ...................................
Executive Director CIBC Oppenheimer Corp.
1600 Smith, Suite 3100
Houston, Texas 77002
Prior to 9/98
.................................... ................................... ...................................
.................................... ................................... ...................................
James L. Sullivan Vice President and Chief Memorial Investment Advisors,
Financial Officer Inc.
................................... ...................................
................................... ...................................
Vice President Memorial Group, Inc.
................................... ...................................
................................... ...................................
Vice President Service Financial Group, Inc.
.................................... ................................... ...................................
.................................... ................................... ...................................
Larry O. Knowles Vice President and Chief Memorial Investment Advisors,
Financial Officer Inc.
................................... ...................................
................................... ...................................
Vice President Memorial Group, Inc.
................................... ...................................
................................... ...................................
Vice President Service Financial Group, Inc.
.................................... ................................... ...................................
.................................... ................................... ...................................
Kathryn P. Harrison Compliance Officer Memorial Investment Advisors,
Inc.
................................... ...................................
................................... ...................................
Compliance Administrator Beutel Goodman Capital
Management, Inc.
.................................... ................................... ...................................
.................................... ................................... ...................................
Amy Kitchell Director of Marketing Memorial Investment Advisors,
Inc.
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Fund Services, LLC, Registrant's underwriter, serves as
underwriter for the following investment companies registered under the
Investment Company Act of 1940, as amended:
The Cutler Trust
Forum Funds
Monarch Funds
Sound Shore Fund, Inc.
TrueCrossing Funds
(b) The following officers of Forum Fund Services, LLC, Registrant's
underwriter, hold the following positions with registrant. Their
business address is Two Portland Square, Portland, Maine 04101.
<TABLE>
<S> <C> <C>
Name Position with Underwriter Position with Registrant
.............................. ..................................... ....................................
.............................. ..................................... ....................................
Ronald H. Hirsch Treasurer Vice President and Treasurer
.............................. ..................................... ....................................
.............................. ..................................... ....................................
John Y. Keffer Director Trustee
.............................. ..................................... ....................................
</TABLE>
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Forum Administrative Services, LLC
and Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine 04101.
The records required to be maintained under Rule 31a-1(b)(1) with respect to
journals of receipts and deliveries of securities and receipts and disbursements
of cash are maintained at the offices of the Registrant's custodian, Investors
Bank & Trust Company, 200 Clarendon Street, Boston, Massachusetts 02116. The
records required to be maintained under Rule 31a-1(b)(5), (6) and (9) are
maintained at the offices of the Registrant's adviser or subadviser, as listed
in Item 26 hereof.
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under Rule 485(b) under the Securities Act and has duly caused this amendment to
its registration statement to be signed on its behalf by the undersigned, duly
authorized in the City of Portland, State of Maine on November 7, 2000.
MEMORIAL FUNDS
Christopher W. Hamm, President
/s/ Christopher W. Hamm
----------------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on
November 7, 2000.
(a) Principal Executive Officer
/s/ Christopher W. Hamm
--------------------------------------------
Christopher W. Hamm, President
(b) Principal Financial Officer
/s/ Ronald H. Hirsch
--------------------------------------------
Ronald H. Hirsch, Treasurer
(c) All of the Trustees
/s/ Christopher W. Hamm
--------------------------------------------
Christopher W. Hamm, Trustee
/s/ John Y. Keffer
--------------------------------------------
John Y. Keffer, Trustee
Jay Brammer, Trustee*
J.B. Goodwin, Trustee*
Robert Stillwell, Trustee*
By: /s/ David I. Goldstein
-----------------------------------------
David I. Goldstein, Attorney-in-Fact*
* Pursuant to powers of attorney previously filed as an Exhibit to this
Registration Statement.
<PAGE>
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Memorial Funds to be signed in
the City of Portland, State of Maine on November 7, 2000.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
-----------------------
John Y. Keffer, President
On behalf of Core Trust (Delaware), this amendment to the Registration Statement
of Memorial Funds has been signed below by the following persons in the
capacities indicated on November 7, 2000.
(a) Principal Executive Officer
/s/ John Y. Keffer
---------------------------
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/s/ Ronald. H. Hirsch
---------------------------
Ronald H. Hirsch, Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
---------------------------
John Y. Keffer, Chairman
Costas Azariadis, Trustee
J. Michael Parish, Trustee
James C. Cheng, Trustee
By:/s/ John Y. Keffer
------------------------
John Y. Keffer, Attorney in fact*
* Pursuant to powers of attorney previously filed as an Exhibit to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
(d)(6) Form of Investment Advisory Agreement Between Registrant and Memorial
Investment Advisors, Inc.
(m) Rule 12b-1 Plan.
(p)(3) Code of Ethics adopted by PPM America, Inc.
(p)(7) Code of Ethics adopted by Memorial Investment Advisors, Inc.